Home Insurance Shock Eases but Costs Stay Elevated, Newrez Finds

Why It Matters

Rising insurance costs strain borrower cash flow and DTI ratios, threatening loan eligibility, while the slowdown offers limited relief for the housing market.

Key Takeaways

• Home insurance premiums rose 64% to $2,625 from 2021 to 2025.
• Premium growth slowed to 10% in 2025, the lowest since 2021.
• Louisiana, Florida, Texas top state premiums, exceeding $4,000 annually.
• Arizona saw 94% premium jump; Alaska only 27% increase.
• Delinquency rates stay below historic norms despite higher insurance costs.

Pulse Analysis

The past four years have seen a dramatic escalation in homeowners’ insurance premiums, driven by more frequent severe weather events and rising reconstruction costs. Newrez’s analysis of 1.2 million escrowed loans reveals a 64% jump in average premiums, from $1,597 in 2021 to $2,625 in 2025. While the pace of increase eased to 10% in 2025—the slowest since the pandemic‑era surge—prices remain well above pre‑2021 levels, adding a sizable new line item to the cost of homeownership.

Geography matters. The study highlights stark state‑by‑state gaps, with Louisiana ($4,238), Florida ($4,060) and Texas ($3,952) topping the list, while Arizona experienced the steepest growth rate at 94% and Alaska the modest 27% rise. These disparities pressure lenders to reassess risk models, as higher premiums inflate borrowers’ debt‑to‑income ratios and can trigger loan rejections. Yet, strong equity cushions—home values climbed roughly $50,000—have helped keep delinquency rates below historic norms, underscoring homeowner resilience amid rising ancillary costs.

Looking ahead, the insurance market’s trajectory will likely hinge on climate policy, rebuilding cost trends, and insurer pricing strategies. Mortgage originators may need to enhance insurance‑shopping tools and educate borrowers on coverage options to mitigate DTI impacts. For homeowners, proactive policy reviews and exploring state‑run insurance pools could provide relief. Overall, while the slowdown in premium growth offers a modest reprieve, elevated insurance costs remain a structural factor shaping affordability and loan performance in the U.S. housing sector.