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

Homebuyers across the country are learning the hard way: The price of a home and the price of living in it aren't the same thing.

The national median listing price fell 1.4% year over year in September, the 11th consecutive month of annual declines, according to Realtor.com® data. In the Northeast, prices fell 3.8%.

All else being equal, those declines should offer some much-needed breathing room for buyers trying to make the monthly math work. But all else isn't equal.

“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 of those costs has been climbing particularly fast.

The average single-family mortgage holder now pays a record $209 per month for property insurance, according to ICE Mortgage Technology. That's an 8.7% jump compared to a year ago and, according to ICE, a nearly 80% leap since the 2020.

“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 alone now accounts for 9.6% of the average mortgage holder's monthly payment—up from a low of 7.2% in 2018. And some of the markets where home prices are falling are simultaneously seeing some of the country's fastest insurance increases.

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 just how dramatically the insurance landscape has changed. The average single-family mortgage holder paid $121 a month for property insurance in 2020. Just five years later, that figure had climbed an additional $88 per month.

Using a matched-pair methodology 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% at the end of 2024. The pace has since cooled, but costs were still up 8.7% from a year earlier.

That's considerably faster than either consumer inflation or average hourly earnings. In June, consumer prices were up 3.5% from a year earlier, while average hourly earnings were up about 3.4%.

And set against today's relatively modest home price declines, the increase becomes even more consequential.

“The math is blunt,” Walker says.

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

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

On ICE's latest year-over-year measure, meanwhile, the average property insurance payment rose by about $17 a month—enough to eat up roughly half of those savings.

The burden can vary dramatically by location

And the national average can understate what buyers encounter in some parts of the country.

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

The increase—the largest of any state—has been driven in large part by hail and wind risk. And the state's surprising ranking points to the shifting landscape of how insurance costs are changing across the country.

Nearly 1,900 counties saw home insurance costs increase during the first half of 2026, according to Insurify, including more than 130 where premiums rose by double digits.

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

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

And the increase can look even steeper at the local 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, reaching $4,545. The company points to the county's exposure to hail, tornadoes, severe winds, and other weather risks as a major source of pressure.

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

Even in states notorious for expensive insurance, however, the trajectory can differ dramatically from one place to another.

Florida remains the country's most expensive state for homeowners insurance in Insurify's estimates, at an average of $8,486 a year. But statewide premiums rose a comparatively modest 2.3% during the first half of 2026 as the state's insurance market showed signs of stabilization.

Zoom in on Collier County, however, and the picture changes. Insurify estimates that the average annual premium there jumped 25.3%, or $2,028, in just six months, reaching $10,052.

That variation is one reason a falling median home price can't tell a buyer exactly how much more affordable a particular home has become.

A cheaper house doesn't necessarily mean a cheaper monthly payment

Of course, that doesn't mean rising insurance costs have completely erased the savings from falling home prices. The impact—to the extent that there is one at all—depends on the individual property, its insurance costs, the buyer's mortgage, and the other expenses that make up the monthly cost of ownership.

But that points to an important difference in how homebuyers and insurers operate: effectively putting a price on two different things.

A home's sale price reflects what buyers are willing and able to pay for the property, including the value of the land underneath it. Homeowners insurance, by contrast, is primarily concerned with what it would cost to repair or rebuild the structure—and the likelihood 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.

The insurance limit reflects rebuilding costs, he says, while the transaction price also captures factors such as land value and local demand.

That disconnect is especially important in places exposed to costly 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 the Realtor.com 2025 climate risk report, which found that insurance costs weigh most heavily on lower-value, high-risk markets, particularly in states such as Louisiana and Florida.

In those markets, she says, rising insurance costs can eat away at much of the affordability improvement buyers would otherwise get from falling prices.

There are already signs that insurance has become a meaningful financial strain 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 couldn't 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 important before—not after—they decide what a home is worth to them.

“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 check a home's claims history, roof age, and exposure to flooding or wildfires, then build a budget around the full expected monthly cost of ownership—including the mortgage payment, property taxes, insurance, HOA fees, and money set aside for maintenance.

“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.”