WASHINGTON (TND) — Home foreclosures rose last month as budgets continue to get squeezed by higher prices that have lingered despite high interest rates and the housing market continues to be one of the most unaffordable in history with growing list prices and expensive mortgage rates.
Foreclosures have been on the upswing in 2024 after cratering over the previous several years mostly due to eviction moratoriums put in place during the pandemic, but it comes at a time of low affordability in the housing and rental markets and after several years of significant price increases for necessities.
A report released this week by real estate data provider ATTOM found there were foreclosure filings on 32,621 properties in the U.S. It was a 3% increase from last month, but a 7% decline from the year prior.
The frequency that foreclosure proceedings were completed also dropped modestly from last month but cratered 28% when compared to 2023. More than a third of them were concentrated in five states: California, Illinois, Pennsylvania, Ohio and Texas.
Major metro areas with the highest completion rate included Chicago, Philadelphia, Riverside, California, Jacksonville, Florida and Las Vegas.
“May’s foreclosure activity highlights nuanced shifts in the housing market,” said Rob Barber, CEO at ATTOM. “While we observed a slight increase in foreclosure starts, the decline in completed foreclosures indicates resilience in certain areas. Monitoring these evolving patterns remains crucial to understanding the full impact on the real estate sector.”
Nationwide, the foreclosure rate in May was 1 in every 4,320 housing units. There are a handful of states where the issue is much worse with New Jersey coming in at more than double the national average at one in every 1,939 homes receiving a foreclosure notice. Illinois (one in every 2,362); Delaware (one in every 2,595); Connecticut (one in every 2,600); and Florida (one in every 2,638) had the next highest rates.
Major metropolitan areas also accounted for many of the foreclosure starts in May. New York had the highest at 1,447 starts, Chicago had 1,272, Houston at 915, Miami had 750 and Philadelphia with 713.
Foreclosures have increased in 2024 but economists have said that it is not a sign of impending trouble for the housing market, as it is still trying to catch up from the pandemic-era eviction moratorium that was in place for several years. While the federal moratorium expired in the summer of 2021, many states expanded them for longer.
Homeowners who find themselves in financial trouble can also frequently avoid foreclosure by putting their home on the market, which is struggling with inventory and helped boost sales prices.
A separate report published this week by Redfin said the median U.S. home-sale price hit another all-time high of $394,000 during the four weeks ending June 9. That is a 4.4% increase from the year earlier, the biggest jump in the last three months.
People hoping to buy a home have not received any relief from skyrocketing home values that started during the pandemic when ultra-low interest rates flooded the market with buyers and drove up competition for a finite supply of houses.
While activity has cooled considerably since then, prices have been consistently growing on a national scale. Housing analysts and economists have pointed to the low supply of homes on the market and a lacking supply overall, as the U.S. is short millions of housing units.
Homeowners who bought or refinanced their home have been hesitant to upgrade or move to a new location since mortgage rates spiked up toward 7% amid the Federal Reserve’s benchmark rate increases to slow inflation. The Fed opted to keep their rate pause in place at their meeting this week even after the latest consumer price index showed modest progress in getting inflation back to 2%.
Mortgage rates are highly influenced by the Fed’s benchmark interest rate, which means they could dip some once the central bank moves forward with a cut, which economists are expecting this fall.
“The latest inflation report is good for homebuyers because it has already sent mortgage rates down, though this week’s Fed meeting will temper mortgage-rate declines,” said Chen Zhao, Redfin’s economic research lead. “But on the other side of the coin, if lower mortgage rates bring back more demand than supply, that could erase the possibility that home-price growth softens, and push prices up even further. Lower rates and higher prices may ultimately cancel each other out when it comes to homebuyers’ monthly payments.”
ncG1vNJzZmihlJa1sLrEsKpnm5%2BifK%2Bx1qxmp5mknryvedaoqaWcX6y1osCMrKuarJWoeqmt1Z5kraCVYrqwv9NmnaiqlZi5sL%2FUq5ysZaKarq15xKyrmqyVYrWwwdKipaBlnZa%2FrLHTZpycp56kurp5yKedpZmknryvecOema1lnaS%2FtbPAoJxmoZ6psrOx0q1kq5mkmsA%3D