Home foreclosures rose again in February as Americans continue to grapple with the ongoing cost-of-living crisis.
That is according to a new report published by real estate data provider ATTOM, which found that there were 32,938 properties in February with foreclosure filings, which includes default notices, scheduled auctions and bank repossessions. That marks an 8% increase from the prior year, although it is down 1% from the previous month.
"The annual uptick in U.S. foreclosure activity hints at shifting dynamics within the housing market," said ATTOM CEO Rob Barber. "These trends could signify evolving financial landscapes for homeowners, prompting adjustments in market strategies and lending practices."
However, the number of foreclosure completions fell in 28 states in February. Lenders repossessed 3,397 properties in February, down 14% from the previous month and 11% from the prior year. The biggest declines took place in Georgia, where completed foreclosures fell 52%, and in New York, with a decline of 41%.
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Still, foreclosures surged in other states. In South Carolina, foreclosures surged 51%, while Missouri saw a 50% jump and Pennsylvania a 46% increase. Foreclosures in Texas rose 7%, and in Indiana they climbed 0.8%.
Although foreclosures are rising, they remain well below the levels recorded during the 2008 financial crisis.
But the problem could soon get worse as high home prices, mortgage rates and property taxes bite Americans.
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Housing affordability is the worst it's been in decades, thanks to a spike in home prices and mortgage rates. Combined, the two have helped to push the typical salary required nationwide for homeownership up to $106,500 – a stunning 61% increase from the $59,000 required just four years ago, according to Zillow.
There are several reasons to blame for the affordability crisis.
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The Federal Reserve's aggressive interest-rate hike campaign sent mortgage rates soaring above 8% for the first time in nearly two decades last year. Rates have been slow to retreat, hovering near 7% as hotter-than-expected inflation data dashed investors' hopes for immediate rate cuts.
The average rate for a 30-year fixed loan rose to 6.74% this week, Freddie Mac reported, well above the pandemic-era lows of 3%.
Even though mortgage rates are nearly double what they were three years ago, home prices have hardly budged.
That is largely due to a lack of available homes for sale. Sellers who locked in a low mortgage rate before the pandemic began have been reluctant to sell, leaving few options for eager would-be buyers.
