Insurance Premiums on New-Construction Homes Are up to 38% Lower on Than Older Homes

New-construction homes may be hiding a massive, unadvertised money-saver: a built-in discount on home insurance, according to new data.

The average annual premium for a newly built home sat a staggering 35% lower than that for a 20-year-old home in 2025—handing buyers $1,002 in annual savings right out of the gate, according to an Insurify analysis conducted for Realtor.com®.

When stacked against a 40-year-old property—the median age of America’s housing stock—that premium gap widens to 38%, giving new-construction owners $1,120 in savings.

The findings build on recent research from Realtor.com that found new-construction buyers save $25,000 over their first decade of ownership, thanks to lower utility bills and fewer major system repairs.

As hopeful buyers stare down another season of elevated mortgage rates and economic headwinds, the potential savings of newly built homes could finally offer some relief and flip the math in their favor. 

The premium gap between new-construction and older homes

Average premiums for a new-construction home sat at an average of $1,828 per year in 2025—well below the national average of $2,948 average annual cost for homes of all ages.

Those savings were driven, in large part, by the newness of these homes. 

As homes age, maintenance spending heavily concentrates on repairing essential systems, which can trigger insurance claims. But new-construction homes aren’t seen as carrying the same risk, according to Julia Taliesin, economic analyst and licensed insurance agent at Insurify.

“Newly built homes are generally less expensive to insure because they have newer roofs, plumbing, and electrical systems and are built to newer safety standards, making them less likely to generate claims,” she explains.

To put the scale of these types of repairs and potential claims in perspective, the total estimated cost of needed repairs for homes was $198.4 billion in 2024 alone, according to research from the Federal Reserve Bank of Philadelphia. 

But those savings don’t last forever. Taliesin says that insurance costs begin increasing as a home ages, with the biggest jump after the first decade.

“The steepest jump occurs within the first 10 years, when average premiums rise from $1,828 for a newly built home to $2,476 for a 10-year-old home,” she says. That translates to roughly a $650 or 35% premium hike by the time the home celebrates its 10th anniversary.

The curve continues into the second decade of ownership, though at a more moderate pace.

Insurify’s end-of-2025 data shows that the average annual premium for a 20-year-old home climbs to $2,830—about $354 more expensive than for a 10-year-old home, and a whopping $1,002 more expensive than for a brand-new build. 

“After about 20 years, premium increases become more gradual,” Taliesin says, as the average premium creeps up to $2,889 for 30-year-old homes before finally hitting the national baseline of $2,948 at the 40-year mark.

Climate resiliency may add to savings

Keep in mind, these national averages don’t take into account regional differences or the volatile shifts driven by an insurance industry sagging under the weight of rising reconstruction costs following natural disasters.

While much of this risk was historically viewed as a problem exclusive to coastal regions or fire-prone forests, severe weather exposure has moved inland as hail and extreme wind become systemic issues across the market.

Nationally, approximately 18.3% of homes in the U.S. (representing nearly $8 trillion in property value) face severe or extreme risk of hurricane-grade wind damage. Meanwhile, hail threatens more than 1.7 million homes in Chicago alone—representing about $1 trillion in reconstruction cost value.

Older homes carry an outsized risk of damage from severe weather, says Taliesin. “Older roofs and aging systems may be more vulnerable to wind, hail, hurricanes, and other severe weather events,” she explains.

But new homes are seen as more resilient to these threats, because they have newer components and may be built to newer standards—and that could drive even more savings in these markets.

“The difference [between new-construction and older homes] may be more pronounced in regions exposed to severe weather because newer homes and roofs are generally better equipped to withstand storm-related damage,” according to Taliesin.

What this means for homebuyers

To estimate how much homebuyers might save over their first decade of ownership, Realtor.com modeled home insurance costs for a newly built home and a 20-year old home based on the 2025 data. 

Based on these findings, a new-construction homeowner could save just over $7,300 in insurance costs during their first decade of ownership compared with buying a 20-year-old home, assuming the premium differentials by home age remain stable over time.

These estimates don’t take into account regional differences, potential claims, or changes to premiums driven by insurance carriers—all of which can erase or add to these savings. But caveats aside, the figure offers a glance at what these differences in average premium really mean for homebuyers on the market today.

“The real story here is that choosing new construction expands a buyer's budget,” says Joel Berner, senior economist at Realtor.com and author of the Total Construction Report. “What buyers thought they could afford in an existing home when they accounted for operating costs is less than what they can afford in a new home because of the savings we highlight here.”

When you combine the insurance advantages with reduced maintenance, a new-construction buyer could pocket as much as $32,000 in savings over 10 years.

To put that into perspective, that sum is roughly the cash equivalent needed to permanently buy down a 30-year mortgage rate from 6.5% to 4.00% on a median-priced home with a 20% down payment. 

And in an environment where affordability seems like a relic of a different era, that extra cash could be a game-changer. In Berner’s words, “Affordability is still a major struggle for buyers across the board, but the savings on operating costs offered by new construction create a little more breathing room.”