The cost of living in the United States varies significantly from state to state. While inflation has eased from its peak, the financial burden remains unevenly distributed, impacting both individual budgets and business location decisions. Companies often find it advantageous to establish themselves in areas where living expenses are more manageable for employees and customers. But where are these expensive states?
CNBC incorporates cost of living as a key factor in its annual “America’s Top States for Business” study, which assesses state competitiveness. The methodology involves evaluating price indices for a wide range of goods and services, as calculated by the Council for Community and Economic Research (C2ER). Additionally, housing affordability, a persistent concern nationwide, is considered. Furthermore, the escalating insurance crisis is taken into account by examining the cost of insuring a median-priced home, based on the latest available data.
While some states offer relatively affordable living, others come with a hefty price tag. Here are the ten most expensive states in America, along with insights into the costs of basic necessities in their priciest metropolitan areas.
10. Utah
Utah faces a housing affordability challenge due to limited housing supply failing to match the influx of new residents. In St. George, a four-bedroom house costs approximately 2.5 times more than in McAllen, Texas. To address this, proposals focus on increasing housing supply, with Governor Spencer Cox aiming to create 35,000 new starter homes by 2028. The Utah Foundation suggests strategies beyond single-family homes, including condominiums, restricting short-term rentals, and taxing house flippers, although these face implementation challenges.
2024 Cost of Living Score: 16 out of 50 points (Top States Grade: D+)
- Consumer Price Index (June, West Region, Mountain Division): Up 2.3%
- Annual Homeowners Insurance (statewide): $1,394
- Average Home Price (Salt Lake City): $642,170
- Half Gallon of Almond Milk: $4.71
- Monthly Energy Bill: $173.85
9. (tie) Florida
Florida is at the heart of a national insurance crisis. Intensifying hurricanes, rising construction costs, and extensive litigation have caused numerous insurance companies to leave, leading to the nation’s highest premiums for homeowners. Citizens, the state’s insurer of last resort, has seen its policyholders double in two years, exceeding 1.2 million. A proposed 14% rate increase further exacerbates the issue. Governor Ron DeSantis signed a tort reform measure to curb policyholder lawsuits, hoping to attract insurers back and reduce premiums.
2024 Cost of Living Score: 12 out of 50 points (Top States Grade: D-)
- Consumer Price Index (June, South Region, South Atlantic Division): Up 2.9%
- Annual Homeowners Insurance (statewide): $2,474
- Average Home Price (Fort Lauderdale): $741,832
- Half Gallon of Almond Milk: $4.58
- Monthly Energy Bill: $200.94
9. (tie) New York
Living in New York can be extremely expensive. Housing in Manhattan is nearly ten times more expensive than in Scranton, Pennsylvania, and the cost of a burger is twice as high as in Las Vegas. While prices are stabilizing, eating out in New York City is still approximately 3.5% more expensive than last year. Homeowners insurance is rising but remains lower than in many other states.
2024 Cost of Living Score: 12 out of 50 points (Top States Grade: D-)
- Consumer Price Index (June, Northeast Region, Middle Atlantic Division): Up 3.8%
- Annual Homeowners Insurance (statewide): $1,498
- Average Home Price (Manhattan): $2,683,148
- Half Gallon of Almond Milk: $4.78
- Monthly Energy Bill: $193.78
9. (tie) Rhode Island
Rhode Island’s high costs, especially in coastal areas, can quickly become overwhelming. Renting a two-bedroom apartment in Providence is roughly three times more expensive than a comparable place in Erie, Pennsylvania. The state’s vulnerability to climate disasters contributes to high homeowners insurance premiums, with claims payments from the National Flood Insurance Program increasing significantly.
2024 Cost of Living Score: 12 out of 50 points (Top States Grade: D-)
- Consumer Price Index (June, Northeast Region, Middle Atlantic Division): Up 3.8%
- Annual Homeowners Insurance (statewide): $1,646
- Average Home Price (Providence): $495,603
- Half Gallon of Almond Milk: $4.74
- Monthly Energy Bill: $230.62
9. (tie) Washington
Washington offers a high quality of life, but it comes at a premium. Basic necessities are more expensive; a half-gallon of almond milk costs nearly 15% more in Seattle than in Ponca City, Oklahoma. Homeowners insurance premiums are also high due to increased risks from wildfires and Pacific Northwest storms.
2024 Cost of Living Score: 12 out of 50 points (Top States Grade: D-)
- Consumer Price Index (June, West Region, Pacific Division, year-over-year change): Up 3.0%
- Annual Homeowners Insurance (statewide): $1,506
- Average Home Price (Seattle): $1,014,801
- Half Gallon of Almond Milk: $5.10
- Monthly Energy Bill: $193.41
5. (tie) Colorado
While insurance crises often highlight Florida, California, and Texas, Colorado has the highest premiums when considering the cost to insure a median-priced home. Colorado ranks high in hail claims and wildfire risk. The state is creating an insurer of last resort, the Colorado FAIR Plan, to assist homeowners who cannot obtain insurance, with operations starting next year.
2024 Cost of Living Score: 10 out of 50 points (Top States Grade: F)
- Consumer Price Index (June, West Region, Mountain Division): Up 2.3%
- Annual Homeowners Insurance (statewide): $2,650
- Average Home Price (Denver): $650,770
- Half Gallon of Almond Milk: $4.74
- Monthly Energy Bill: $145.02
5. (tie) Montana
Montana experienced a significant influx of people during the pandemic, leading to high housing prices and an affordability crisis. According to the National Association of Realtors, Montana has the least affordable housing in the country. Growing risks from climate-related disasters like wildfires also contribute to rising insurance costs. Debates are ongoing about encouraging more multi-family dwellings to address the housing shortage.
2024 Cost of Living Score: 10 out of 50 points (Top States Grade: F)
- Consumer Price Index (June, West Region, Mountain Division): Up 2.3%
- Annual Homeowners Insurance (statewide): $1,755
- Average Home Price (Bozeman): $792,008
- Half Gallon of Almond Milk: $4.91
- Monthly Energy Bill: $177.13
3. (tie) Hawaii
Living in Hawaii is expensive due to the need to ship in almost everything, increasing prices. A loaf of bread in Honolulu costs significantly more than in Fayetteville, Arkansas. Housing is also unaffordable, with rent for a two-bedroom apartment nearing $4,000 per month. Only a small fraction of households can afford to buy a single-family home. Higher interest rates and the 2023 Maui wildfires have worsened the situation.
2024 Cost of Living Score: 5 out of 50 (Top States Grade: F)
- Consumer Price Index (June, West Region, Pacific Division): Up 3.0%
- Annual Homeowners Insurance (statewide): $1,883
- Average Home Price (Honolulu): $1,674,195
- Half Gallon of Almond Milk: $5.38
- Monthly Energy Bill: $359.53
3. (tie) Massachusetts
Massachusetts is simply expensive. Housing costs are a major factor, with two-bedroom apartments around $4,000 per month and average home prices near a million dollars. Basic services are also pricey, with a men’s haircut costing twice as much as in Shreveport, Louisiana. However, Massachusetts does offer the highest wages in the nation.
2024 Cost of Living Score: 5 out of 50 (Top States Grade: F)
- Consumer Price Index (June, Northeast Region, New England Division): Up 3.8%
- Annual Homeowners Insurance (statewide): $2,226
- Average Home Price (Boston): $960,671
- Half Gallon of Almond Milk: $4.76
- Monthly Energy Bill: $302.72
1. California
California stands alone as the most expensive state to live in. A significant portion of the population is at risk from climate events, and the state faces an insurance crisis comparable to Florida. High energy prices, driven by taxes and environmental mandates, contribute to the cost. The biggest factor is the state’s severe housing shortage. California has added far fewer housing units than needed over the past decade. Despite efforts to address the shortage, change is slow, and California is likely to remain America’s most expensive state for the foreseeable future.
2024 Cost of Living Score: 3 out of 50 points (Top States Grade: F)
- Consumer Price Index (June, West Region, Pacific Division): Up 3.0%
- Annual Homeowners Insurance (statewide): $2,124
- Average Home Price (San Jose): $1,707,840
- Half Gallon of Almond Milk: $5.05
- Monthly Energy Bill: $294.74
In conclusion, numerous factors contribute to a state’s cost of living, including housing affordability, insurance rates, energy prices, and the general cost of goods and services. While the specific rankings may shift over time, these ten states consistently represent the most expensive places to live in the United States.
