Report: Closing Fees as Percentage of Purchase Price Decreases

Countering skyrocketing home values, the title and settlement industry continues to find ways to manage homebuying fees as closing costs as a percentage of purchase price declined during the first half of 2021.

According to the latest data from ClosingCorp, closing costs as a percentage of purchase prices declined to 1.03% this year, down from 1.06% in 2020.

“Although the average home price increased by nearly $45,000, the closing costs, excluding taxes, on that property only increased by $400,” said Bob Jennings, CEO of ClosingCorp. “In addition to keeping up with high demand, the mortgage industry is doing a good job in holding down the costs it can control.”

During the first half of 2021, ClosingCorp reported the national average closing costs for a single-family property were $6,837 including taxes, and $3,836 excluding taxes. These were 12.3% and 10.5% year-over-year increases, respectively; whereas refinance closings costs increased marginally to $2,398, a 4.87% change from the reported 2020 average of $2,287.

ClosingCorp cost calculations include lender’s title policy, owner’s title policy, appraisal, settlement, recording fees, land surveys and transfer tax. ClosingCorp uses home price data from CoreLogic to estimate closing costs for an average home at the state, core-based statistical area (CBSA) and county levels. ClosingCorp uses ranges, rather than single values, to more accurately capture fees associated with the real transactions.

ClosingCorp analyzed data on more than 1.9 million single-family purchase transactions that ran through its platform in the first half of this year. The report includes market-specific rates and fees, not just network averages charged by the most active settlement services providers in each geographic area, according to Dori Daganhardt, chief data officer of ClosingCorp.

The 2021 report shows the states with the highest average closing costs, including taxes, were: District of Columbia ($30,352), Delaware ($17,831), New York ($17,582), Washington ($13,909), and Maryland ($12,056). The states with the lowest closing costs, including taxes, were: Missouri ($2,102), Indiana ($2,193), North Dakota ($2,321), Kentucky ($2,355) and Wyoming ($2,509).

The states with the highest average closing costs, excluding taxes, were: District of Columbia ($6,523), New York ($6,300), Hawaii ($5,976), California ($5,772), and Washington ($4,803). The states with the lowest closing costs, excluding taxes, were: Arkansas ($2,071), Missouri ($2,102), Indiana ($2,193), Nebraska ($2,193) and Kentucky ($2,193).