Homebuyers across the country are learning the hard way: The price of a home and the price of living there are not 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 decreased by 3.8%.
All else being equal, these reductions should offer some much-needed breathing room for shoppers trying to make the monthly math work. But all else is not equal.
“Even if falling prices lower the monthly payment, those savings can be offset by increased costs like insurance, HOA fees and taxes,” he says. Jiayi XuChief Economist at Realtor.com.
One of those costs rose particularly quickly.
The average single-family mortgage holder now pays a record $209 per month for property insurance. According to ICE Mortgage Technology. That’s a jump of 8.7% from a year ago and nearly 80% since 2020, according to ICE.
“The cost of home insurance is an important part of housing affordability because it’s a recurring payment that lenders typically deposit into the monthly mortgage payment,” says Xu.
Insurance alone now accounts for 9.6% of the average mortgage holder’s monthly payment – down from 7.2% in 2018. Some markets where home prices are falling are also seeing some of the fastest insurance increases in the country at the same time.
Higher premiums cost
“Home prices are definitely going down. But homeowners insurance costs are rising and will continue to outpace any price reductions,” he says. Cameron Walkerwho manages the agent network Smart Real Estate.
ICE data shows how dramatically the insurance landscape has changed. The average single-family mortgage holder paid $121 per month for property insurance in 2020. After just five years, that number has risen to an additional $88 per month.
Using a matched-pairs methodology that compares the same mortgage holder’s payment to what they paid a year ago, ICE found that annual insurance cost growth reached 15.1% at the end of 2024. The pace has slowed since then, but spending is still up 8.7% year over year.
That’s much faster than consumer inflation or average hourly earnings. In June, consumer prices increased by 3.5% compared to the previous year average hourly earnings rose about 3.4%.
And the increase, set against today’s relatively modest decline in home prices, is even more impressive.
“Math is blunt,” says Walker.
The national median list price in September was $419,250, down 1.4% from a year earlier. This results in a discount of approximately $6,000.
For a buyer putting 20% down and taking out a 30-year mortgage at 7.3%, that low price would reduce principal and interest by just $33 a month.
According to ICE’s annual report, the average property insurance premium increased by about $17 a month — enough to eat up about half of those savings.
The load can vary dramatically depending on the location
The national average may understate what buyers experience in some parts of the country.
Minnesota provides a remarkable example. The average annual home insurance premium there rose 12.9%, or $457, to $3,987 in the first half of 2026, according to the insurance comparison platform’s latest report. To insure.
The increase — the largest of any state — is due in large part to the risk of hail and wind. And the state’s surprising ranking points to a changing picture of how insurance costs vary across the country.
According to Insurify, nearly 1,900 countries saw home insurance costs increase in the first half of 2026, including more than 130 where premiums rose by double digits.
Some of these increases are occurring in housing markets, where asking prices are moving sharply in the opposite direction.
For example, the median list price in Minneapolis fell 4.1% in September compared to a year earlier. ICE, meanwhile, found that the average property insurance premium among mortgage holders rose 13.1% over the past year.
And the increase can look even steeper at the local level.
Insurify estimates that the average annual premium in Hennepin County, where Minneapolis lives, rose 20.9%, or $784, to $4,545 in the first half of 2026. The company cites the county’s exposure to hail, tornadoes, high winds and other weather risks as the main source of pressure.
The same pattern holds true in Sacramento, CA, where median list prices fell 2.6% and insurance premiums rose 12.5%. In San Diego, prices fell 6.3%, while insurance costs rose 12.4%.
Even in states known for expensive insurance, the trajectory can vary dramatically from place to place.
Florida remains the most expensive state in the country for homeowners insurance at an average of $8,486 per year, according to Insurify’s estimates. But statewide premiums rose a relatively modest 2.3% in the first half of 2026 as the state insurance market showed signs of stabilization.
But zoom past Collier County and the picture changes. Insurify estimates that the average annual premium there rose 25.3%, or $2,028, to $10,052 in just six months.
This variability is one reason why the falling median home price cannot tell a buyer exactly how much more affordable a particular home is.
A cheaper home does not necessarily mean a cheaper monthly payment
Of course, that doesn’t mean that rising insurance costs have completely wiped out the savings from falling home prices. The impact—generally, to the extent it exists—depends on the individual property, its insurance costs, the buyer’s mortgage, and other costs that make up the monthly cost of ownership.
But it points to an important difference in how home buyers and insurers operate: effectively pricing two different things.
The sale price of a home reflects what buyers are willing to pay for the property, including the value of the land beneath it. Homeowners insurance, on the other hand, is primarily concerned with what it will cost to repair or rebuild the structure and the likelihood that the insurer will have to do so.
“A lower sales price does not necessarily mean a lower cost to insure the home,” he explains Christmas Morganinsurance broker Atlas Risk Partners.
According to him, the insurance limit reflects the reconstruction costs, while the transaction price includes factors such as land value and local demand.
This disconnect is especially important in places exposed to costly climate risks.
“Since premiums are largely dependent on climate risk and rebuilding costs, even if house prices fall, premiums don’t fall proportionately,” Xu said.
He points to the Realtor.com 2025 climate risk report showing that insurance costs are especially burdensome in low-cost, high-risk markets in states like Louisiana and Florida.
In those markets, he says, rising insurance costs can eat up much of the favorable price increases buyers might get from falling prices.
There are already signs that insurance is becoming a meaningful financial strain for homeowners.
The Federal Reserve 14% of insured homeowners said they would struggle to pay their premiums in 2025, and 20% said they wanted more coverage but couldn’t afford it. More than 6 out of 10 people said that insurance costs have increased more than expected in recent years.
For buyers, this makes it important to get an insurance quote before they decide how much a home is worth to them, rather than after.
“I instruct my buyers to get an insurance quote before they make an offer, not after they close the deal,” he says.
He also advises buyers to check the home’s claim history, age of the roof and exposure to floods or wildfires, then budget around the full expected monthly cost of ownership, including mortgage payment, property taxes, insurance, HOA fees and money set aside for repairs.
“An unexpectedly high insurance quote can significantly increase the monthly cost of home ownership,” says Walker. “I’d rather have a buyer learn this in week 1 than week 4.”
