Are Foreclosures Increasing? What Homeowners Should Know

Foreclosure represents a legal process where a lender repossesses a property when the homeowner fails to make mortgage payments. It typically occurs after a period of delinquency, as a last resort for lenders to recover outstanding debt. Foreclosure trends often signal shifts in financial stability and housing market health, providing insights into pressures homeowners may face.

Current Status of Foreclosure Activity

In the first quarter of 2024, U.S. properties with a foreclosure filing increased 3% from the prior quarter, totaling approximately 95,349. Lenders initiated foreclosure processes on 67,657 properties, a 2% rise from the preceding quarter. Bank repossessions (REO properties) also increased 7% from the previous quarter, totaling 10,052.

For the full year 2024, U.S. properties with foreclosure filings totaled 322,103. This represented a 10% decrease from 2023 and a 35% decrease from 2019 levels, before the pandemic. These filings accounted for 0.23% of all U.S. housing units, a slight reduction from 0.25% in 2023. Foreclosure starts and bank repossessions also declined from 2023.

In July 2025, U.S. foreclosure activity reached its highest point of the year, with filings up 13% compared to July 2024 and 11% from June 2025. Lenders began foreclosure proceedings, increasing 12% from June and 11% from a year ago. Despite these recent increases, overall foreclosure activity remains considerably below the peaks observed in 2010.

Key Drivers of Foreclosure Trends

Several economic and market factors influence the rate at which properties enter foreclosure. Higher interest rates increase borrowing costs for new mortgages and impact adjustable-rate loans. When interest rates rise, monthly mortgage payments for those with variable rates can become unaffordable, potentially leading to default. Higher interest rates can also slow down the housing market by reducing buyer demand, which may lead to diminished property values.

Unemployment rates directly affect a homeowner’s ability to meet their mortgage obligations. Job loss can quickly make regular mortgage payments unsustainable. Individual unemployment is a strong predictor of mortgage default, directly linking income stability to foreclosure risk. Even temporary joblessness can disrupt financial planning and push a household towards delinquency.

Inflation contributes to foreclosure risk by increasing the overall cost of living. As prices for essential goods like food and energy rise, household budgets become strained, leaving less disposable income for mortgage payments. This pressure can affect even fixed-rate mortgage holders, as surging expenses elsewhere erode financial resilience, making them vulnerable to economic shocks.

Housing inventory levels also influence foreclosure trends. An increase in available homes, particularly from distressed sales, can depress overall property values. When property values decline, homeowners may find themselves with negative equity, meaning they owe more on their mortgage than their home is worth. This can reduce the incentive to continue making payments, especially with other financial hardships.

Regional and Market Segment Differences

Foreclosure trends are not uniform across the United States; significant variations exist by geographic region and specific market segments. In the first quarter of 2024, certain areas experienced higher foreclosure rates than the national average. States such as Delaware, New Jersey, South Carolina, Nevada, and Florida reported some of the highest rates.

Some states, including New Hampshire, Illinois, and Florida, showed notable quarterly increases in foreclosure starts in Q1 2024. Major metropolitan areas like New York City, Houston, and Chicago also saw a substantial number of properties begin the foreclosure process.

By July 2025, Nevada, Florida, and Maryland had some of the highest foreclosure rates. Among major metropolitan areas, Houston, Las Vegas, and Cleveland recorded some of the highest rates. These regional differences often reflect localized economic conditions, such as employment changes or specific housing market pressures.

Foreclosures can impact local housing markets by increasing the supply of available homes, which often enter the market at discounted prices. This influx can create downward pressure on overall home values in affected neighborhoods, with nearby properties potentially losing value. While distressed properties can become a source of more affordable housing after renovation, their initial entry into the market can disrupt local pricing and inventory balances.