Soaring Housing Costs Drive Up Foreclosures

Foreclosures have increased to levels not seen in six years, and rising "extra" housing costs are a big part of the story. Nearly 119,000 US properties received a foreclosure filing in the first quarter of 2026, data firm Attom reports, up 26% from a year earlier and the highest since early 2020, before pandemic relief sharply cut foreclosures. Analysts say the overall rate still looks similar to pre-COVID norms and doesn't yet point to a broad collapse among homeowners, many of whom are locked into low mortgage rates and sit on sizable equity. But the uptick signals strain from fast-rising costs that sit on top of the mortgage payment: homeowners insurance, property taxes, and homeowners association dues, the Wall Street Journal reports.

The average annual home insurance bill rose 12% last year to $2,948, while average single-family property taxes climbed 3% to $4,427, according to Insurify and Attom. LegalShield says foreclosure-related legal inquiries jumped 20% in March. Layer in resumed student-loan payments and higher delinquencies on credit cards and auto loans, and more borrowers are hitting what one Mortgage Bankers Association economist called "payment shocks." Recent buyers are especially exposed. Many purchased at higher mortgage rates and, in some regions of the South and West, now face softening home prices, leaving them with little or no equity to tap if they fall behind.

Indiana, South Carolina, and Florida posted the highest rates, per Realtor.com—with 1 in every 739 housing units in Indiana named in a foreclosure filing. Still, the state's total was just over 4,000, far below the more than 14,000 filings for some quarters during the Great Recession. Among the issues nationally is that the government's COVID-era protections have largely expired; with mortgage rates above 6%, loan modifications can increase monthly payments rather than reduce them, per the Journal. While many owners can still sell to escape foreclosure, that option is less available to those who bought in the last few years—exactly the group now making up most foreclosure auctions.