But costs remain under control despite spike in home prices and industry volume
The average closing costs for a single-family home increased by 5.9% to $6,087 (including taxes) in 2020, according to data from ClosingCorp. Excluding taxes, closing costs were $3,470, up 3.9% from the previous year.
“Thanks to record low interest rates and a rapid shift to remote work, 2020 was a strong purchase market eclipsing the 2003 high,” ClosingCorp CEO Bob Jennings. “Purchase originations topped $1.4 trillion, and the average home price increased by nearly 10%. The US mortgage industry handled this significant increase in volume, and an even larger spike in refinances, seamlessly, and did it working remotely for three quarters of the year.”
The average US home price rose by approximately $30,000 last year, but the year-over-year difference in average purchase closing costs was only $339, including taxes, and $131, excluding taxes. According to Jennings, this is an “impressive” level of cost control, given the high dollar amount and complexity of the average purchase transaction. He attributed much of the cost control to technology, which has enabled both lenders and settlement services providers to scale up capacity while reducing costs.
The District of Columbia ($29,329) ranked first on the list of states with the highest average closing costs (including taxes). Delaware ($17,727), New York ($13,261), Maryland ($11,709), and Washington ($11,513) followed. Meanwhile, the states with the lowest closing costs (including taxes) were Missouri ($1,571), Indiana ($2,100), Kentucky ($2,229), Iowa ($2,272), and South Dakota ($2,276).
