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Applications for foreclosures increased again in October, after reaching historic lows in recent years, according to new data released Thursday.
Even if the figures remain low, the persistent rise in foreclosures could be a sign of cracks in the real estate market.
According to Attom, a real estate data and analytics company, 36,766 properties in the United States were subject to some type of foreclosure in October, such as notices of default, scheduled auctions or bank foreclosures. That’s 3% more than September and a 19% jump from October 2024, and is the eighth consecutive month of annual increase, Attom said.
Housing starts, which constitute the initial phase of the process, increased 6% over the month and were 20% higher than the previous year. Competing foreclosures, the final phase, jumped 32% year over year.
“Even with these increases, activity remains well below historic highs. The current trend appears to reflect a gradual normalization of foreclosure volumes as market conditions adjust and some homeowners continue to face higher housing and borrowing costs,” Attom CEO Rob Barber said in a statement.
Florida, South Carolina and Illinois lead the nation in state foreclosure filings. At the metro area level, Tampa, Jacksonville and Orlando, Florida, saw the most filings, with Riverside, California and Cleveland rounding out the top five.
Looking specifically at completed foreclosures, Texas, California, and Florida saw the most, suggesting these states will see more inventory hitting the market at distressed prices. There is still very strong demand for housing, especially in the lower price ranges, so it is likely that foreclosed properties will find buyers quickly.
At the height of the Great Recession, more than 4 percent of mortgages were foreclosed, according to Rick Sharga, CEO of CJ Patrick Co., a housing market information company. Today, less than 0.5% of people are foreclosed on, which is well below the historical average of between 1% and 1.5%. Additionally, 4% of mortgages are delinquent; at the height of the financial crisis, almost 12% were.
“So no tsunami of foreclosures to worry about,” Sharga said. “That said, there are some areas of concern. [Federal Housing Administration] delinquencies exceed 11% and represent 52% of all seriously delinquent loans; we will likely see more FHA loans foreclosed in 2026.”
He also noted that states where home prices have fallen while insurance premiums have soared — Florida and Texas, in particular — are seeing rising defaults.
Even as house prices fall nationally, they remain stubbornly high. Meanwhile, mortgage rates, which were expected to fall more sharply after the Federal Reserve began cutting rates, are still within a percentage point of their recent highs. Some recent buyers who thought they could now refinance at lower rates may be feeling pressure, especially with inflation still stubborn.
Consumer debt is at a record high, delinquencies are rising in other types of consumer credit, and the job market appears to be weakening — all of which could contribute to a cracking of the housing market.
“None of these issues have yet impacted mortgage performance, but it would be unrealistic to assume that these trends, coupled with slowing home sales and declining home price appreciation, will not result in at least a slight increase in delinquencies and defaults in the months ahead,” Sharga added.