Closing costs keep pace with rapidly rising home prices

Jennings pointed out that the 13.4% jump in purchase mortgage closing costs corresponds to a 13.2% year-over-year increase in lender origination costs, as per a Mortgage Bankers Association report.

Additionally, the report showed that closing costs have kept pace with rapidly increasing home prices. In 2021, the average US home price grew by more than $50,000, while average closing purchase closing costs were up by $818 including taxes and $390 excluding taxes.

Despite the increase in the absolute dollar amount of closing fees, closing costs as a percentage of home sales decreased slightly from 2020. The average purchase fees as a percentage of the average sales price in 2021 were 1.81% compared to 1.85% in 2020. When taxes are excluded, purchase fees as a percentage of sales price were 1.01% last year compared to 1.06% the previous year.

The report included the lender’s title policy, owner’s title policy, appraisal, settlement, recording fees, land surveys, and transfer tax as part of the total closing costs. The calculations use home price data from CoreLogic to estimate closing costs for an average home at the state, core-based statistical area (CBSA) and county levels.