Owning a home is about to get more expensive, with homeowners insurance premiums expected to surge significantly over the next two years.
“The average U.S. homeowner insurance premiums are expected to grow 8% in 2026 and another 8% in 2027,” Anand Srinivasan, CFA, head of research and development at real estate analytics firm Cotality, tells Realtor.com®.
Cotality’s chief data and analytics officer, John Rogers, recently shared these projections at ResiDay, an annual real estate conference.
“The hot potato of insurance premiums—these have been raising dramatically over the last few years,” Rogers said.
Cotality reports that insurance has climbed to 9% of the typical U.S. homeowner’s payment.
That’s “the highest average on record of a person’s outlay in terms of principal, interest, property tax, and insurance premiums,” Rogers noted.
An unexpected increase in the cost of homeowners insurance can catch existing homeowners off guard and can also discourage potential buyers who are trying to estimate their monthly housing expenses,” says Hannah Jones, senior economic research analyst at Realtor.com.
“In both cases, climbing insurance costs can contribute to weaker buyer demand and more fragile housing stability in already vulnerable markets.”
Reasons for the price hike
One of the reasons homeowners insurance premiums are expected to spike is because of rising construction and material costs.
“The supply chain is causing some pressures, aluminum being the top one,” Rogers explained. “That’s risen 10 percent year on year, most of it coming from Canada and China. And there’s an amplification effect with some of the tariffs happening between countries right now.”
Srinivasan tells Realtor.com that construction costs are up 44% since the pandemic.
Rising premiums are also driven by the frequency and magnitude of natural disaster, and the increasing number of homes exposed to climate-related risks.
“12% of the residential housing stock is at high-risk to a hazard or peril—think about wildfires, winter storms, hail,” said Rogers. “That’s equivalent to $4.3 trillion dollars worth of reconstruction cost.”
The third factor contributing to anticipated premium hikes is migration into high-risk areas.
“As a society, we just like to live in high-risk areas,” Rogers said. “One in six of us live in a high-wildfire-risk area.”
Srinivasan adds that “more people are flocking to places with extreme weather conditions, like areas prone to flood or fire, or Florida and Hurricane Alley which has become more highly populated than ever before.”
State insurance regulations, though intended to help, have in some cases caused insurers to retreat from high-risk markets, which also raises costs.
In some regions, insurance rates have surged as much as 62% due to this combination of factors, Srinivasan says.
Impact of elevated premiums
Rising premiums have an outsized impact in low-value, high-risk markets, according to the 2025 Realtor.com Housing and Climate Risk Report.
Jones notes this is especially pronounced in states like Louisiana and Florida, where climate-related risks are driving steep annual increases.
“In these markets, homeowners often have less financial cushion, meaning that even modest premium hikes can strain household budgets,” she says. “For buyers, the added cost can push an otherwise affordable home out of reach.”
Florida real estate agent Ron Myers, of Ron Buys Florida Homes, has witnessed that firsthand.
“I’ve personally seen buyers lose their loan approvals after they got their insurance quotes,” he says. “They are fully qualified before, but once that monthly premium gets added in, it pushes their debt-to-income ratio too high and the lender pulls the plug.”
According to a recent Realtor.com survey, one-third of current homebuyers (30%) said they have completely changed the geographic area they are searching in due to insurance challenges, while another 30% have expanded their search beyond their original targets. Nearly 25% have overhauled their entire homebuying strategy as a result.
Existing homeowners are also feeling the squeeze.
“For current owners, rising premiums can limit their ability to keep up with other housing costs or make needed repairs, potentially increasing financial stress,” says Jones.
Denise Supplee, a real estate agent and co-founder of SparkRental in Doylestown, PA , says she has friends and family in Florida dealing with insurance hikes of 30% or more.
“One ended up moving out of state because the premiums became impossible to justify,” she says. “Another is preparing to list their home in part because the cost of staying—between taxes, insurance, and ongoing increases—just does not make financial sense.”
With premium spiking and more insurers pulling out of high-risk markets, more Americans are considering going without it. One in seven homes is currently uninsured, and more than half of the homeowners (58%) Realtor.com surveyed said they’d drop their insurance if the price got too high.
Premium reduction options
In his ResiDay keynote speech, Rogers outlined ways that science and data could mitigate losses and reduce insurance premiums moving forward.
He cited the L.A. wildfires as an example. Despite modest wildfire risk scores, the Palisades saw fires spread from building to building, a phenomenon known as “urban conflagration.”
Cotality is now assessing “urban conflagration” risk for individual properties, providing insurers with a more precise picture of how fires move through older housing.
After the 2018 Paradise fire, Rogers said that Cotality helped design a rebuilding blueprint that could reduce wildfire risk by up to 75% and cut insurance premiums by over 50%. The plan featured homes built to IBHS standards, reconfigured low-density layouts with firebreaks, and perimeter-focused strategies to reduce community risk.
Cotality has worked with the California Department of Insurance on an ongoing basis to assess every home through AI-driven aerial imagery in order to analyze the resiliency factors of each particular house—including roof materials, closed eaves, and setbacks.
This data is used to calculate a home’s resilience score.
“We send that signal to the insurer, the insurer reaches out, and we can lower insurance premiums by over 20%,” said Rogers.
For the 75% of Americans who worry their homeowners insurance could soon become unaffordable, that would offer some welcome relief.