The New Home Affordability Hurdle: Keeping The Lights On

Many people across the United States are opening their utility bills to an unwelcome surprise. Michael Strickland of Dallas, however, says he saw it coming.

“But seeing the actual number still gave me that sinking ‘here we go again’ feeling,” Strickland says. Since 2021, Strickland estimates his electric bill has risen by roughly 30%, from an average of about $150 to $180-$200 most months. In the summer, with air conditioning on, he says a $250-plus bill is not uncommon. 

Strickland’s already taken steps to cut his bill, including raising the temperature on his thermostat and installing energy efficient appliances. On top of that, he shops around for his home’s energy plan, which is an option in his state.

Whether it’s wars, wildfires, inclement weather or growing energy demand, electricity prices are rising and have been for some time. With the closing of the Strait of Hormuz, Americans are witnessing yet another inflection point that could further spike their electric bills. That uncertainty adds another notch of anxiety for homeowners.

Homeownership was once viewed as financially more predictable than renting and absorbing annual rent increases. But regularly rising property taxes, homeowners insurance and HOA fees have changed that in recent years — and those don’t account for the higher mortgage rates and home values creating greater costs simply to purchase a home in the first place. Now you can add utilities to the list of expenses impacting home affordability and giving potential homebuyers pause. 

“Personally, the first time I saw a noticeably higher utility bill, it wasn’t just the amount, but it was how unpredictable it felt,” says Andrew Hoesly in California. “It’s one thing for costs to gradually increase, but when they jump month to month, it creates a different level of concern because it’s harder to plan around.” Hoesly,  a general manager for solar installation company Solar Tech, says this unpredictability is driving behavior.

Energy has gone from being a relatively stable expense to something that feels variable and harder to budget.

— Andrew Hoesly
General manager, Solar Tech

When volatility hits your kitchen table

Residential electric prices are expected to increase 4.9% this year, according to the May 2026 Short-Term Energy Outlook by the U.S. Energy Information Administration (EIA). This is on top of a 5% increase last year. Sure, it’s a smaller increase than what we saw in 2022 with the invasion of Ukraine, but that’s little comfort to homeowners already stretched thin. 

In 2025, 2 out of 5 homeowners cited fluctuating utility bills as having an impact on their financial stability, according to a survey from homeowners insurance company Hippo. And that was before the conflict in the Middle East sent oil prices skyward. 

But war isn’t the only thing driving utility costs up and even short-term disruptions that affect costs are unlikely to abate once circumstances change. The kilowatt-hour (kWh) rate you pay rarely decreases long-term. 

Rising electrical demands from both residents and industry mean electrical companies need to invest in improving the grid, which leads to higher rates overall. With increases in data centers and manufacturing, industrial and commercial electrical needs are increasing more quickly than residential needs. Unfortunately, everyone uses the same grid, and everyone pays for the improvements needed for this grid.

It all comes together to mean that buying a home — or staying in the one you have — could require some updated budgeting to make all the costs work.

The electrical mix is shifting slowly

Understanding how market forces impact your electric bill — and how you might be able to impact what you pay — means understanding where your electricity comes from. About 40% of electricity in the U.S. is generated by burning natural gas, according to the EIA. The rest comes from nuclear, coal and renewable sources, like wind, solar and hydroelectric power.

But this mix is slowly changing. In fact, 17% of electricity in the U.S. was generated by wind and solar in 2025, as compared to 16% in 2024 and 14% in 2023. Wind and solar generation are both expected to continue to increase, albeit slowly, and mostly at the decrease of coal usage. 

Each of these sources has benefits and drawbacks. Natural gas and coal can be stored before burning, but once it’s burned, it’s gone. Wind, solar and hydroelectric power all depend on the weather, but there’s no cost to the fuel source. And nuclear? Once you start a nuclear reactor, it’s difficult to stop it. 

Even with the onboarding of a significant amount of renewable energy, the U.S. is still getting more of its energy from burning gas than any other source. That leaves the U.S. exposed to  fluctuations in global trade even when the country mines most of its own gas.

This, of course, leaves homeowners susceptible to global geopolitical circumstances, but it’s about more than what’s going on in the world. What’s going on next door matters, too.

Where you live matters

Location matters when talking about electricity. First, your state may regulate how much your electrical bill can increase. For example, in Michigan, Consumers Energy petitioned the state government to raise electrical rates by 13.3% in 2025. In March 2026, the Michigan Public Service Commission (MPSC) voted to allow an 8.9% rate increase. A mere seven days after the MPSC passed this change, Consumers Energy petitioned for another rate increase.

In Michigan, like in many other states, you can’t choose who supplies your electricity, which means shopping around for lower rates isn’t an option. Similarly, you have few options as to the source of your energy, but that, at least, is something you can think about when shopping for a home.

Proximity to the infrastructure required to send electricity affects your costs. If you live near a coal plant or wind farm, that’s likely the power that’s keeping your lights on. Since the war in Iran is impacting the prices of natural gas, it’s possible your bill will be less impacted if your region primarily uses another fuel source to generate electricity.

But beyond your state or region, the home itself has a huge impact, too. Utility costs are a major concern when deciding to buy a home. Buyers should consider factors like tree cover, southern exposure, insulation and energy-efficient appliances.

Homebuyers are looking more closely at utility bills because affordability is about the total monthly payment, not just the mortgage.

— Christy Walker
Real estate broker, Phoenix, Ariz.

Walker adds this is especially true in hot climates, like Arizona.

There’s a perception that electric bills are more controllable than things like taxes, insurance and your mortgage. While it’s true that electric bills are more behavior-based, there’s a limited amount you can control, especially in extreme climates. With things like global economic strain and unpredictable weather patterns, it can feel like the level of control is shrinking.

Why weather is affecting your bill more

It’s no secret that our electrical consumption has gone up over the decades. Air conditioning, in particular, is a significant draw on the electrical grid. When everyone’s AC kicks on one hot summer day, electrical companies need to generate more electricity. That tends to mean turning on extra plants to meet the demand. Even if the peak period only lasts for a few hours, these extra power plants must be staffed and burning fuel, ready to add power to the grid. Some electrical companies address this by charging more during these peak times, but other companies just charge more across-the-board.

But weather can cause other issues, especially with renewable energy sources. For instance, a lack of snowfall in the Mountain West, like we’ve seen this past year, can mean less power generated by hydroelectric dams when temps warm. Wind and solar can have similar issues. Destructive weather, such as wildfires and storms also raise costs due to infrastructure replacement needs.

All of this adds another layer of uncertainty to your monthly bill. Where world leaders can negotiate on trade and to end wars, no one controls the weather. The best you can do is explore your options, be pickier about your energy usage and upgrade your home to make it more efficient.

How some homeowners are taking matters into their own hands

Some homeowners have had enough of these rising costs and are looking for relief. For those who live in states where utilities are deregulated, they may be able to shop around for lower rates. There are currently 18 states, plus Washington, D.C., that have either fully or partially deregulated utilities. Companies like ChooseEnergy.com (which has the same parent company as Bankrate, Red Ventures) help consumers shop around for competitive utility rates.

To provide more predictability, homeowners can look into fixed-rate plans. Fixed-rate plans allow homeowners to sign a contract agreeing to pay for electricity at a set rate for a certain period of time, typically one to three years. This offers shelter against price spikes, but also means no savings if prices dip below the contracted rate.

Still other homeowners are going a step further. For Brad Hauver in the Finger Lakes region of New York, going off-grid made more financial sense. 

“When I built our home 12 years ago using top quality insulation and Energy Star appliances, our average monthly electric bill was $80-$130 year round, including heat and AC,” says Hauver. But now, due to climbing electrical costs, his electrical bill has averaged nearly $500 a month for the past six months.

Hauver is planning to invest $30,000 in a DIY solar setup to cover the costs. That means, at an average cost savings of $500 a month, it will pay for itself in five years. That’s assuming the electrical price doesn’t go up.

According to Hoesly, many homeowners are turning to solar for long-term security. The average homeowner spends around $20,000 for a solar setup, according to Consumer Affairs. It’s an investment, but rising monthly bills could shorten the period to break even on that cost. 

In the meantime, the “jump scare” of opening your monthly electricity bill could still pop up. Geopolitical dynamics, aging infrastructure and unpredictable weather conditions are all playing into rising costs. While you can’t control that, you can be thoughtful about the home you buy to begin with, considering all the costs — mortgage interest and principal, insurance, property taxes, HOA fees and, yes, utility costs — that impact affordability. 

In a time of tough home affordability, every small action you take to improve your finances matters more. A sense of stability often starts with taking some of the fear out of your monthly bills.