PLANO, Texas–A new analysis shows home foreclosures saw a "notable" increase in January as Americans “continue to grapple with the ongoing cost-of-living crisis.”
In his most recent report, Brian Turner, president and chief economist with Meridian Economics, cited data showing lenders repossessed 3,954 U.S. properties in January, a 13% increase from the previous month.
“It marked the first monthly increase in completed foreclosures since July 2023,” Turner wrote. “Foreclosures are up 1% from the same time one year ago. Foreclosure filings may be running along its seasonal path right now but there are other external factors at play, such as relatively high mortgage rates, inflation, employment shifts and other market dynamics.”
Turner noted the report, by ATTOM, also indicated that there were 37,679 properties with foreclosure filings – which includes default notices, scheduled auctions and bank repossessions – in January, up 10% from the previous month and up 5% from 2023.
Below Crisis Levels
“Still, although foreclosures are on the rise, they remain well below the levels recorded during the 2008 financial crisis,” Turner stated. “But the problem could soon get worse as high home prices, mortgage rates and property taxes bite Americans. Strategically, 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 portion of average wages nationwide required for major homeownership expenses up to 33%.”
Additional Data Points
Turner further observed:
- The affordability crisis has been driven by the Fed's aggressive interest-rate hikes
- Rates have been slow to retreat, with the average rate for a 30-year fixed loan rose to 6.9% last week, well above the pandemic-era lows of 3%
- The lack of home inventory available for sale is being driven by current homeowners with low mortgage rates who are reluctant to sell.
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