Homeowners could see insurance premiums jump another 16% over the next two years due to an uptick in natural disasters and rebuilding costs.
The average homeowner insurance premium is expected to rise 8% in 2026, followed by another 8% in 2027, real estate analytics firm Cotality projected at an annual real estate conference.
Cotality’s chief data and analytics officer, John Rogers, explained that these premiums have been “rising dramatically” over the last few years, with some areas seeing double-digit growth.
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Rogers said that insurance now accounts for 9% of the typical U.S. homeowner’s payment, which is the “highest average on record of a person’s outlay in terms of principal, interest, property tax, and insurance premiums.”
Danielle Hale, chief economist at Realtor.com, told FOX Business that the higher cost of rebuilding, a reflection of both overall inflation and some housing supply-chain specific trends, is driving these premiums higher.
Hale also said that “more frequent disasters have resulted in more damage and increasing claims, trends insurers are trying to get ahead of.”
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Realtor.com research revealed that a “significant chunk of the U.S. housing stock” actually faces severe or extreme climate risk, ranging from more than 6% for flooding, 18% for wind risk, and 6% for wildfire, according to Hale.
Trillions of dollars worth of real estate are exposed to significant risk, Hale said.
In the September report, Realtor.com noted that coastal markets dominate the list of metro areas with the highest dollar value of homes exposed to severe or extreme flood risk, though the Miami–Fort Lauderdale–West Palm Beach, Florida, market ranks first.
About $306.8 billion in total home value is at risk, representing 23.2% of the area’s total housing value.
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This uptick in cost could further hinder buyers in an already stagnant housing market. Many have been pushed to the sidelines by a persistent affordability crisis, as high interest rates and rising housing costs have made it difficult for people to move.
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, said in a recent report that this rise in premiums could discourage potential buyers who are trying to estimate their monthly housing expenses.
“In both cases, climbing insurance costs can contribute to weaker buyer demand and more fragile housing stability in already vulnerable markets,” Jones said.
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