Mortgage foreclosures rise in October, a sign of housing market distress

Foreclosure filings rose again in October, after remaining at historic lows in recent years, according to new data released Thursday.

While the numbers are still small, the continued rise in foreclosures may be a sign of cracks in the housing market.

There were 36,766 properties in the United States with some type of foreclosure filing in October — such as notices of default, scheduled auctions, or bank repossessions, according to ATTOM, a real estate data and analytics company. This is 3% higher than in September, and 19% higher than in October 2024, and represents the eighth straight month of annual increases, Atom said.

Foreclosure initiations, the first stage of the process, rose 6% during the month and were 20% higher than a year earlier. Competing foreclosures, the final stage, jumped 32% year over year.

“Even with these increases, activity remains well below historical highs. The current trend appears to reflect a gradual normalization in foreclosure volumes as market conditions adjust and some homeowners continue to face higher housing and borrowing costs,” Rob Barber, CEO of ATTOM, said in a statement.

Florida, South Carolina and Illinois led the nation in state foreclosure filings. At the metropolitan area level, Tampa, Jacksonville and Orlando, Florida, had the most filings, with Riverside, California, and Cleveland, Ohio, rounding out the top five.

Looking specifically at completed foreclosures, Texas, California and Florida had the highest shares, indicating that those states will see more inventory coming onto the market at distressed prices. There is still very strong demand for homes, especially in the lower price ranges, so those foreclosed properties will likely find buyers quickly.

At the height of the Great Recession, more than 4% of mortgages were in foreclosure, according to Rick Charga, CEO of The CJ Patrick Company, a real estate market intelligence firm. Today, less than 0.5% of households are in foreclosure, well below the historical average of 1% to 1.5%. Additionally, 4% of mortgages are delinquent; At the height of the financial crisis, it was nearly 12%.

“So, we don’t have to worry about the foreclosure tsunami,” Sharga said. “However, there are a few areas of concern. [Federal Housing Administration] The percentage of delinquent loans exceeds 11%, representing 52% of all seriously delinquent loans; We will likely see more FHA loans in foreclosure in 2026.”

He also noted that states where home prices have fallen while insurance premiums have risen — Florida and Texas in particular — are seeing an uptick in defaults.

Although home prices have declined nationally, they remain stubbornly high. Meanwhile, mortgage interest rates, which were expected to fall more sharply after the Federal Reserve began cutting interest rates, remain within one percentage point of their recent highs. Some recent buyers who thought they might have been able to refinance at lower interest rates now may feel the pressure, especially with stubborn inflation persisting.

Consumer debt is at all-time highs, delinquencies on other types of consumer credit are increasing, and the job market appears to be weakening — all of which could contribute to cracks in the housing market.

“None of these issues have impacted mortgage performance – yet, but it would be unrealistic to assume that these trends, coupled with slower home sales and lower home price appreciation, won’t lead to at least a slight increase in delinquencies and defaults in the coming months,” Charga added.