Home Prices Are Easing in Some Markets, but Higher Insurance Bills Are Cutting Into the Benefit

Homebuyers are finding out that a lower sticker price on a house does not always translate into a cheaper cost of ownership.

The national median listing price slipped 1.4% from a year earlier in September, marking the 11th straight month of annual declines, according to Realtor.com data. In the Northeast, prices were down 3.8%.

On paper, that kind of drop should give buyers a little more room to work with each month. In practice, the picture is more complicated.

“Even if falling prices lower the monthly payment, that saving can be offset by rising costs such as insurance, HOA fees, and taxes,” says Jiayi Xu, senior economist at Realtor.com.

One expense in particular has been rising quickly.

The average single-family mortgage holder now pays a record $209 a month for property insurance, according to ICE Mortgage Technology. That is 8.7% higher than a year earlier and nearly 80% above the 2020 level, ICE says.

“The cost of home insurance is an important part of housing affordability, because it is a recurring payment that lenders usually escrow into the monthly mortgage payment,” Xu says.

Insurance now makes up 9.6% of the average mortgage holder’s monthly payment, up from a low of 7.2% in 2018. In some of the very places where home prices are falling, insurance costs are rising especially fast.

The cost of higher premiums

“Home prices are definitely declining. But homeowner insurance costs are rising and will continue to outpace any price cuts,” says Cameron Walker, who manages the agent network at Clever Real Estate.

ICE data shows how sharply the insurance environment has shifted. In 2020, the average single-family mortgage holder paid $121 a month for property insurance. By five years later, that figure had climbed by another $88 per month.

Using a matched-pair method that compares the same mortgage holder’s payment with what they paid a year earlier, ICE found that annual insurance-cost growth peaked at 15.1% near the end of 2024. The pace has since eased, but costs were still 8.7% higher than a year earlier.

That is well above both consumer inflation and average hourly earnings. In June, consumer prices were up 3.5% from a year earlier, while average hourly earnings rose about 3.4%.

Against relatively modest home-price declines, the impact becomes even clearer.

“The math is blunt,” Walker says.

The national median list price was $419,250 in September, down 1.4% from a year earlier. That amounts to roughly a $6,000 discount.

For a buyer putting 20% down on a 30-year mortgage at 7.3%, that lower price would reduce principal and interest by only about $33 a month.

By ICE’s latest year-over-year measure, the average property insurance payment rose by about $17 a month, which would erase roughly half of that savings.

The burden can vary dramatically by location

The national average can also hide the reality in some local markets.

Minnesota is a striking example. The average annual home insurance premium there rose 12.9%, or $457, in the first half of 2026, reaching $3,987, according to a recent report from insurance comparison platform Insurify.

That increase, the largest among states, has been driven largely by hail and wind risk. It also highlights how the insurance map is changing across the country.

Nearly 1,900 counties saw home insurance costs rise in the first half of 2026, Insurify said, including more than 130 where premiums climbed by double digits.

Some of those increases are happening in housing markets where asking prices are moving in the opposite direction.

In Minneapolis, for example, the median list price fell 4.1% from a year earlier in September. ICE also found that the average property insurance payment among mortgage holders rose 13.1% over the past year.

The increase can be even sharper at the county level.

Insurify estimates that in Hennepin County, home to Minneapolis, the average annual premium jumped 20.9%, or $784, in just the first half of 2026 to $4,545. The company points to exposure to hail, tornadoes, severe winds, and other weather risks as a major source of pressure.

The same pattern appears in Sacramento, CA, where median list prices fell 2.6% while insurance payments increased 12.5%. In San Diego, prices dropped 6.3% while insurance costs rose 12.4%.

Even in states known for costly insurance, the trend can differ sharply by location.

Florida remains the most expensive state for homeowners insurance in Insurify’s estimates, with an average annual premium of $8,486. Still, statewide premiums rose a relatively modest 2.3% in the first half of 2026 as the market showed signs of stabilizing.

Zoom in on Collier County, though, and the story changes. Insurify estimates the average annual premium there surged 25.3%, or $2,028, in just six months to $10,052.

That spread is one reason a lower median home price does not tell buyers exactly how much more affordable a specific property has become.

A cheaper house does not always mean a cheaper monthly payment

That does not mean higher insurance costs have wiped out all of the savings from lower home prices. The effect, if there is one, depends on the individual property, its insurance expense, the mortgage, and the other costs that make up the monthly bill of homeownership.

But the contrast highlights an important difference between how homebuyers and insurers assign value.

A home’s sale price reflects what buyers are willing and able to pay, including the value of the land. Homeowners insurance, by contrast, is mainly about how much it would cost to repair or rebuild the structure, plus the odds that an insurer will have to do so.

“A lower sale price doesn't mean a lower cost to insure the home,” explains Milad Morgan, an insurance broker at Atlas Risk Partners.

He says the insurance limit reflects rebuilding costs, while the sale price also includes factors such as land value and local demand.

That gap matters most in areas exposed to expensive climate risks.

“Because premiums depend mainly on climate risk and rebuild costs, even when home prices fall, premiums don't fall proportionally,” Xu says.

She points to Realtor.com’s 2025 climate risk report, which found that insurance costs weigh most heavily on lower-value, high-risk markets, especially in states such as Louisiana and Florida.

In those places, she says, rising insurance costs can wipe out much of the affordability improvement buyers would otherwise gain from falling prices.

There are already signs that insurance has become a meaningful financial burden for homeowners.

The Federal Reserve found that 14% of insured homeowners struggled to afford their premiums in 2025, while 20% said they wanted more coverage but could not afford it. More than 6 in 10 said their insurance costs had risen more than expected in recent years.

For buyers, that makes the insurance quote something to check before, not after, deciding what a home is worth.

“I instruct my buyers to obtain an insurance quote before they make an offer, not after they go under contract,” Walker says.

He also advises buyers to review a home’s claims history, roof age, and exposure to flooding or wildfires, then budget for the full expected monthly cost of ownership, including the mortgage payment, property taxes, insurance, HOA fees, and maintenance reserves.

“An unexpected high insurance quote can substantially increase the monthly cost of homeownership,” Walker says. “I'd rather a buyer learn that in Week 1 than in Week 4.”