Dive Brief:
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Washington, DC, leads U.S. states as the most expensive place to buy a home, according to a recent Cheat Sheet analysis of Bankrate data. The median home price in the District of Columbia is $549,000, with average closing costs adding $2,213.
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Hawaii isn't far behind, with a median home price of $520,000 and average closing costs of $2,655. California and Massachusetts follow, with median home prices of $389,000 and $350,000, respectively. Closing costs average $2,257 in California and $2,773 in Massachusetts.
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Oregon, Utah and Nevada registered as the least expensive on the list of priciest markets to become a homeowner. All three states had a median home price of $250,000 or less and average closing costs between $1,967 and $2,156.
Dive Insight:
High closing costs can be a drag on price-sensitive buyers, sometimes being the determining factor as to whether they can afford the home.
Meanwhile, low inventory and strong demand continue to drive up home prices, a trend that could persist if housing starts and building permit authorizations continue to lag expectations. Starts hit an eight-month low in May, according to the Commerce Department, while building permits sank further to their lowest levels in 13 months.
A decline in builder optimism in June points to professionals’ continuing struggle to keep pace with demand amid the industry's persisting skilled-labor shortage. The latest Housing Market Index from the National Association of Home Builders and Wells Fargo showed declines in current and future sales expectations. Additionally, a drop-off in buyer traffic demonstrates the effect of home-price increases on activity.
Economists are concerned that there continues to be a lack of supply to meet demand, though growth in home completions could help ease pressure on the market. Housing completions increased 5.6% from April to May and were up 14.6% year-over-year.
New-home supply has lagged demand since 2009, First American Chief Economist Mark Fleming told HousingWire. According to his estimates, the industry will need to produce 1.5 million new housing units per year to meet the needs of today’s buyers.