Extreme Weather Drives Home Insurance Costs to New Heights, Pricing Out Buyers

As of August 2025, the cost of buying a home in the United States has risen dramatically in recent years. However, the decreasing rate of Americans able to afford purchasing a home is not solely due to high home prices. According to reports, rising insurance rates have also become a significant factor deterring prospective buyers, especially first-time home buyers.

The National Association of Realtors' economist Jessica Lautz revealed that first-time home buyers have dropped to the lowest level recorded in more than four decades. This trend is largely attributed to the substantial increase in insurance costs, which have risen by over 50% over the past 10 years. In areas vulnerable to extreme weather events, such as California, Florida, and Texas, insurance rates have seen even more significant increases due to more powerful and frequent storms.

Historically, insurance rates were not a primary consideration for prospective home buyers. However, this has become a relatively new trend, with homeowners now needing to factor in home insurance earlier in the homebuying process than before. Experts suggest that this is a consequence of rising global temperatures, as the continued use of dirty energy exacerbates the overheating of the planet, leading to more severe and frequent natural disasters.

As a result, insurance providers are not only increasing rates but also dropping coverage in areas prone to these disasters. Experts recommend that homeowners shop around for the best rates in their area and save for more expensive repairs to avoid filing multiple small claims, which can further increase their insurance premiums.