Home Prices Are Falling in These Markets, but Rising Insurance Costs Are Eating Into the Savings

Homebuyers across the United States are discovering a stark reality: the cost of purchasing a home and the expenses associated with living in it are not aligned. In September, the national median listing price for homes decreased by 1.4% compared to the previous year, marking the 11th consecutive month of annual price declines, as reported by Realtor.com®. In the Northeast region, home prices experienced a more significant drop of 3.8%. While these declines might appear to offer relief for buyers struggling with monthly payments, the overall financial picture is more complex.

“Even if falling prices lower the monthly payment, that saving can be offset by rising costs such as insurance, HOA fees, and taxes,” stated Jiayi Xu, a senior economist at Realtor.com. Among these costs, property insurance has been escalating rapidly.

The average monthly payment for property insurance for single-family mortgage holders reached a historic $209, according to ICE Mortgage Technology. This figure represents an 8.7% increase from the previous year and a staggering nearly 80% rise since 2020. Xu emphasized the significance of insurance costs in housing affordability, noting that they are a recurring expense typically included in the monthly mortgage payment. Currently, insurance accounts for 9.6% of the average mortgage holder's monthly payment, a notable increase from just 7.2% in 2018.

“Home prices are definitely declining. But homeowner insurance costs are rising and will continue to outpace any price cuts,” remarked Cameron Walker, who oversees the agent network at Clever Real Estate. The data from ICE clearly illustrates the dramatic shift in insurance costs. In 2020, the average monthly property insurance payment was $121, but within five years, it surged by an additional $88 per month.

According to ICE's year-over-year analysis, the growth rate for insurance costs peaked at 15.1% at the end of 2024. Although this rate has since moderated, costs still rose by 8.7% compared to the previous year. This increase significantly outpaces both consumer inflation, which was reported at 3.5% in June, and average hourly earnings, which rose by about 3.4%.

The national median list price stood at $419,250 in September, reflecting a 1.4% decline from the prior year, translating to a reduction of roughly $6,000. For a buyer making a 20% down payment on a 30-year mortgage at an interest rate of 7.3%, this lower price would only reduce principal and interest payments by about $33 monthly. In contrast, the average property insurance payment increased by approximately $17 monthly, effectively consuming about half of the savings generated from the lower home price.

Regional variations in insurance costs can further complicate the situation for homebuyers. For instance, Minnesota experienced the highest increase in home insurance premiums, which rose by 12.9%, or $457, in the first half of 2026, reaching an average of $3,987. This surge has been largely attributed to risks associated with severe weather such as hail and wind. Nearly 1,900 counties across the country saw increases in home insurance costs during the same period, with over 130 counties reporting double-digit hikes.

In Minneapolis, the median list price fell by 4.1% year-over-year in September, while the average property insurance payment increased by 13.1%. The situation was even more pronounced in Hennepin County, where the average annual premium rose by 20.9%, amounting to an additional $784, reaching $4,545. This spike is attributed to the county's vulnerability to severe weather events.

Similar trends were observed in California, where Sacramento's median list prices declined by 2.6%, yet insurance payments surged by 12.5%. In San Diego, home prices fell by 6.3%, while insurance costs rose by 12.4%. Even in Florida, known for high insurance costs, the trajectory of premiums can vary significantly. While the state average stands at $8,486 annually, an increase of 2.3% was recorded in the first half of 2026, reflecting some stabilization in the market. However, in Collier County, the average premium skyrocketed by 25.3%, or $2,028, reaching $10,052.

This disparity illustrates that a decrease in median home prices does not necessarily equate to lower monthly payments for buyers. The overall impact of rising insurance costs on affordability varies depending on the specific property, its location, and the associated expenses that contribute to the total cost of ownership. This underscores a critical distinction between the sale price of a home and the insurance costs, which are determined by factors such as risk assessment and replacement costs.