Recent data shows that new construction may have an important advantage for buyers that can easily be overlooked: insurance costs. 

While rising home prices and elevated interest rates are top of mind for buyers, about one-third of buyers surveyed by John Burns Research and Consulting said they were worried about the cost of homeowners insurance. However, in the Midwest, 90% of buyers said they were not concerned about the availability or cost of homeowners insurance, the highest share among U.S. regions. 

Homes built in 2020 or later cost 10% to 15% less to insure per square foot than homes built between 1980 and 2010, according to the report. It’s not entirely surprising, however, that premiums grow with aging roofs, older plumbing and electrical systems, and older materials. 

John Burns found that new homes can have insurance costs that are 20% to 50% lower per square foot than existing homes in markets including San Francisco, Boston and Philadelphia. In Dallas, Houston and Atlanta, new homes were 9% to 16% cheaper to insure. In Chicago, new homes were 5% cheaper to insure. 

The report highlights that insurance for new homes is also cheaper in markets with higher catastrophic risk. The disaster coverage reportedly makes up a higher share of the insurance bill, and insurers typically discount for features like impact-rated windows, hip roofs and roof-to-wall reinforcement. New homes can also get certain mitigation credits automatically under current building codes, according to John Burns. Older homes, on the other hand, might qualify only after retrofitting.