Homeownership is about to get more expensive again. New projections show that insurance premiums are likely to climb sharply over the next two years, adding even more strain to an already stretched housing market. For many Americans, this will hit at a time when mortgage rates, property taxes, and everyday expenses are already running well above historical norms.
Premiums Expected to Climb 16 Percent Over Two Years
Real estate analytics firm Cotality estimates that the average homeowner insurance premium will rise 8 percent in 2026 and another 8 percent in 2027. These increases are tied to the growing frequency and cost of natural disasters and the rising expense of rebuilding damaged homes.
Cotality chief data and analytics officer John Rogers said premiums have been “rising dramatically” in recent years, with some regions seeing double digit increases.
Rogers also noted that insurance now makes up 9 percent of the typical U.S. homeowner’s total monthly housing payment. He called this the “highest average on record of a person’s outlay in terms of principal, interest, property tax, and insurance premiums.”
This shift means insurance is no longer a small side cost. It is becoming a major component of housing affordability.
Why Premiums Are Rising Faster Than Inflation
Danielle Hale, chief economist at Realtor.com, told FOX Business that rising rebuilding costs are a major factor behind the insurance spike. She explained that the cost pressures stem from both broad inflation and housing specific supply chain challenges that have made materials and labor more expensive.
Hale also pointed to a more troubling trend that insurers have been grappling with. She said that “more frequent disasters have resulted in more damage and increasing claims, trends insurers are trying to get ahead of.”
Realtor.com research shows that a large share of American homes face severe or extreme climate exposure. According to Hale, more than 6 percent of homes face flooding threats, 18 percent face significant wind risk, and 6 percent face wildfire danger. These risks translate directly into higher premiums as insurers price in the likelihood of more major claims.
Hale added that trillions of dollars worth of real estate is now exposed to meaningful climate risk.
The Markets Most at Risk: Coastal Homes Take the Hardest Hit
Realtor.com’s September climate report shows coastal markets carry the highest dollar value of homes vulnerable to severe flood risk. The Miami, Fort Lauderdale, and West Palm Beach region ranks first nationwide.
Roughly $306.8 billion in home value in this coastal stretch is at risk, representing 23.2 percent of the entire market’s housing value. With ocean temperatures warming, storm severity increasing, and flood maps being redrawn, insurers are raising rates aggressively or pulling back coverage entirely in these markets.
This trend has already reshaped insurance availability in Florida, Louisiana, and parts of California, where several national insurers have limited new policies or exited entirely due to soaring losses.
Why This Matters for Buyers and Sellers
Higher insurance costs add another barrier for homebuyers who were already struggling with elevated mortgage rates and record home prices. For current homeowners, unexpected premium jumps can strain budgets or push them to reduce coverage.
Hannah Jones, senior economic research analyst at Realtor.com, said an unexpected increase in the cost of homeowners insurance can surprise homeowners and deter buyers who are trying to calculate their total monthly housing obligation.
Jones wrote that “in both cases, climbing insurance costs can contribute to weaker buyer demand and more fragile housing stability in already vulnerable markets.”
As affordability worsens, some markets may see slower sales volumes, longer listing times, and greater price sensitivity among buyers.
What Homeowners Can Do Now
With costs rising, homeowners have limited but meaningful ways to reduce risk:
Shop around for insurers. Regional carriers sometimes offer lower prices than national brands.
Increase deductibles carefully. This lowers monthly premiums but raises out of pocket costs during a claim.
Ask about discounts. Storm shutters, new roofs, updated wiring, and monitored security systems can help.
Conduct a coverage audit. Many homeowners carry outdated or insufficient coverage that needs updating.
Look into state programs. Some high risk states offer last resort insurance pools or mitigation grants.
Bottom Line
Homeowners insurance is no longer a background cost. It is emerging as one of the biggest drivers of total housing payments, and the trend is accelerating. With premiums expected to rise another 16 percent through 2027, buyers and current homeowners need to factor these increases into long term planning.
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