Home Prices Are Falling in Some Markets, but Rising Insurance Costs Are Eating Into the Savings
Homebuyers searching for a better deal in 2026 may finally be seeing some encouraging signs. In certain U.S. housing markets, asking prices are declining, potentially creating opportunities for buyers who have been priced out of the market in recent years.
However, there is a catch: a lower home price does not automatically mean a lower monthly cost of homeownership.
According to Realtor.com reporting published October 28, 2026, the national median listing price fell 1.4% year over year in September, marking the 11th consecutive month of annual declines. At the same time, homeowners insurance costs continued to rise, offsetting some of the savings buyers might otherwise receive.
The result is a housing market in which buyers must look beyond the listing price to determine whether a property is genuinely affordable.
For buyers, sellers, and homeowners considering a move, understanding the complete cost of owning a property is becoming just as important as negotiating the purchase price.
Why Are Home Prices Falling in Some Markets?
Housing markets do not move in unison. Local inventory, employment conditions, migration patterns, mortgage rates, and buyer demand all influence home prices.
Some markets that experienced rapid appreciation during the pandemic housing boom are now experiencing price corrections as inventory increases and affordability pressures limit demand. Other markets, particularly those with limited housing supply, continue to demonstrate greater price resilience.
Several factors can contribute to declining home prices:
Higher mortgage rates: Increased borrowing costs reduce purchasing power and can force sellers to adjust their asking prices.
Growing housing inventory: More homes competing for buyers can give purchasers additional negotiating leverage.
Affordability constraints: When prices and financing costs exceed what local households can comfortably afford, demand may weaken.
Changing migration patterns: Markets that previously benefited from strong population inflows may experience slower demand as those trends change.
Longer selling times: Sellers facing fewer offers may need to reduce prices or offer concessions to attract qualified buyers.
These conditions can create opportunities, but a price decline in one city does not necessarily indicate that the entire U.S. housing market is entering a crash.
Rising Homeowners Insurance Costs Are Changing the Affordability Equation
One of the biggest challenges facing buyers is the rising cost of insuring a home.
Realtor.com reports that the average single-family mortgage holder pays approximately $209 per month for property insurance, an increase of 8.7% year over year, according to ICE Mortgage Technology. Insurance accounts for a growing share of the typical monthly mortgage payment.
This matters because homeowners generally need to budget for more than principal and interest.
A realistic homeownership budget should include:
Mortgage principal and interest
Homeowners insurance
Property taxes
Homeowners association dues, if applicable
Routine maintenance and unexpected repairs
Special assessments or other property-specific expenses when relevant
In areas exposed to hail, severe storms, wildfires, flooding, or other elevated risks, insurance premiums can increase even when home prices decline.
Insurance companies evaluate the potential cost of repairing or rebuilding a structure, along with the property's risk profile. A lower sale price does not necessarily reduce those underlying costs.
The takeaway: Buyers should obtain an insurance quote for the specific property before making an offer whenever possible.
How Much Can Falling Home Prices Actually Save Buyers?
Consider a simplified example based on the national listing-price figures reported by Realtor.com for September 2026.
The median listing price was approximately $419,250, down 1.4% from a year earlier. That represents a year-over-year difference of roughly $6,000.
For a hypothetical buyer putting 20% down and financing the remaining balance with a 30-year fixed-rate mortgage at 7.3%, the lower purchase price would reduce monthly principal and interest by approximately $33, assuming the interest rate and down-payment percentage remain unchanged.
That is helpful, but it is not a dramatic reduction in the cost of owning a home.
If insurance, property taxes, HOA dues, or maintenance costs rise, some or all of that monthly savings could disappear.
Actual savings will depend on the purchase price, loan terms, interest rate, taxes, insurance premium, and other property-specific expenses. This example illustrates why buyers should calculate the entire monthly payment instead of relying on a headline price reduction.
Which Housing Markets Deserve Extra Attention?
The national housing market can conceal significant differences between individual cities and neighborhoods.
Realtor.com highlighted several markets where falling listing prices have coincided with rising insurance costs:
Minneapolis, Minnesota: Median listing prices fell 4.1% year over year in September, while average property insurance payments among mortgage holders rose 13.1% over the past year.
Sacramento, California: Median listing prices fell 2.6%, while insurance payments increased 12.5%.
San Diego, California: Median listing prices fell 6.3%, while insurance payments increased 12.4%.
These figures demonstrate why buyers need to evaluate local conditions rather than assume that lower prices automatically create better purchasing opportunities.
The Midwest also deserves a closer look. Recent housing data have shown greater price resilience in parts of the region than in some oversupplied Sun Belt markets. For example, First American's September 2026 Home Price Index reported annual price growth of 5.1% in the Chicago metropolitan area.
However, national and metropolitan trends do not determine the value or affordability of every individual property. Conditions can vary considerably between suburbs, neighborhoods, property types, and price ranges.
Buyers should compare recent comparable sales, active listings, days on market, insurance quotes, property taxes, and HOA financial conditions before deciding where to purchase.
What Should Homebuyers Do Before Making an Offer?
Buyers can protect their budgets by taking several practical steps before committing to a property.
1. Calculate the complete monthly payment
Ask your lender to estimate principal, interest, taxes, insurance, and applicable association dues. Add a separate allowance for maintenance and repairs.
2. Get an insurance quote early
Provide an insurance agent with the property's address, approximate replacement cost, roof age, and other requested details. Ask about deductibles, exclusions, coverage limits, and any conditions that could affect the premium.
3. Review property taxes
Check the current tax bill and investigate whether a reassessment after the sale could change the future tax burden. Do not assume the previous owner's tax payment will remain the same.
4. Inspect the property's condition
Roofing, plumbing, electrical systems, heating and cooling equipment, and other major components can create substantial expenses after closing.
5. Review HOA finances when applicable
For condos and townhomes, examine association dues, reserve funding, recent meeting minutes, planned capital projects, and potential special assessments. A seemingly affordable purchase can become expensive if the association has significant unfunded repairs.
6. Negotiate based on the property's full cost
A lower asking price is one possible negotiating opportunity. Depending on the property and transaction, buyers may also consider seller credits, repair requests, or other concessions permitted by their loan program and contract.
What Does This Mean for Home Sellers?
Sellers should pay attention to the same ownership costs that buyers are evaluating.
When buyers face higher insurance premiums, property taxes, and financing costs, they may become more selective about which homes justify their budgets.
Sellers can respond by:
Pricing the property using recent comparable sales rather than outdated market expectations.
Addressing visible maintenance issues before listing.
Providing accurate information about property taxes, HOA dues, and known improvements.
Making property documentation available to help buyers assess ongoing costs.
Reviewing offers based on the complete terms, including financing, contingencies, and requested concessions.
In a market where buyers have more choices, realistic pricing and transparent information can help a property stand out.
A declining market does not mean every seller must accept a low offer. A well-maintained home in a desirable location may perform differently from a property with deferred maintenance, high carrying costs, or significant competition.
Is 2026 a Good Time to Buy a House?
There is no universal answer. The right time to buy depends on a household's finances, location, time horizon, and the specific property.
Buyers who find a suitable home at a reasonable price, can comfortably afford the full monthly payment, and expect to remain in the property for several years may find opportunities in today's market.
Others may benefit from continuing to save, reducing debt, improving their credit profile, or waiting until they have a clearer understanding of local inventory and financing conditions.
Waiting for prices to fall further also carries uncertainty. Prices can move differently across markets, and future mortgage rates, insurance premiums, and taxes are not guaranteed.
Rather than attempting to predict the exact bottom of the market, buyers should focus on finding a property that fits their budget and long-term needs.
Frequently Asked Questions About Falling Home Prices in 2026
Are home prices falling across the United States in 2026?
Not uniformly. Some markets are experiencing declining prices, while others continue to see modest appreciation. National averages can obscure significant differences between cities, suburbs, and neighborhoods.
Why are home prices falling while insurance costs are rising?
Home prices reflect factors such as buyer demand, available inventory, financing conditions, and local economic activity. Insurance premiums reflect rebuilding costs, coverage requirements, and the property's exposure to insured risks. These factors can move in opposite directions.
Will falling home prices make houses more affordable?
They can help, but affordability also depends on mortgage rates, property taxes, insurance, HOA dues, maintenance, and the buyer's income. A lower purchase price may not produce a substantially lower monthly payment if other expenses increase.
Should I wait for home prices to fall further before buying?
Waiting is a personal financial decision, not a guaranteed strategy. Buyers should compare current market conditions with their budget, financing options, housing needs, and expected time in the property rather than relying on predictions about a future market bottom.
What should I check before buying a home in 2026?
Review the estimated mortgage payment, property taxes, insurance quote, inspection results, expected maintenance costs, and HOA financial condition when applicable. Compare recent sales and competing listings to evaluate whether the asking price is reasonable.
How can a real estate agent help buyers in a changing housing market?
A qualified local real estate agent can help buyers evaluate comparable sales, understand local inventory, identify negotiating opportunities, assess property-specific concerns, and structure offers based on their objectives. Buyers should also consult appropriate mortgage, insurance, tax, and inspection professionals.
Final Thoughts: Look Beyond the Listing Price
Falling home prices can create opportunities for buyers, but the purchase price is only one part of the financial decision.
In 2026, rising insurance premiums and other ownership expenses are making it increasingly important to evaluate a home's total cost before committing to a purchase.
Whether you are buying your first home, moving to a new neighborhood, or preparing to sell, local market knowledge can help you make a more informed decision.
TrustedLocalAgent.com helps connect buyers and sellers with real estate professionals who understand their local markets. If you're considering a move, connect with a real estate agent who can help you evaluate your options and take the next step with confidence.
Market figures reflect the cited reports available as of October 2026. Statistics may use different methodologies and reporting periods. This article is for informational purposes only and is not financial, tax, insurance, or legal advice.
Sources
Realtor.com, “Home Prices Are Falling in These Markets, but Rising Insurance Costs Are Eating Into the Savings,” October 28, 2026.
First American Data & Analytics, September 2026 Home Price Index report.
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