Foreclosure filings rise in May as homeowners grapple with cost-of-living crisis

Foreclosure filings increased by 3% in May, suggesting growing affordability challenges even for existing homeowners
By Sam Bourgi
•
27 June 2024
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The number of foreclosures ticked up in May, suggesting that even existing homeowners struggle to afford a roof over their heads.

According to property data provider ATTOM, there were 32,621 foreclosure filings in May, up 3% from the previous month but down 7% compared to a year earlier.

On a nationwide level, one foreclosure filing was made for every 4,320 homes.

Foreclosure rates are higher in Illinois, Delaware, Connecticut, Florida, and New Jersey, where one filing was made for every 1,939 housing units.

“May’s foreclosure activity highlights nuanced shifts in the housing market,” said ATTOM CEO Rob Barber.

“While we observed a slight increase in foreclosure starts, the decline in completed foreclosures indicates resilience in certain areas.”

Barber notes that a foreclosure start doesn’t necessarily mean that a home will be repossessed. In fact, filling data includes default notices, scheduled auctions, and lender repossessions.

To Barber’s point, lenders repossessed 2,879 homes in May, down 1% from the previous month.

While ATTOM’s report doesn’t indicate imminent danger in the housing market, the rise in foreclosure rates points to growing affordability challenges.

Affordability challenges also affect existing homeowners

The discussion around housing affordability usually revolves around potential buyers, who face record home prices and decade-high mortgage rates.

But with the rising costs of living, even existing homeowners who locked in low rates are struggling to keep a roof over their heads.

According to a study by Creditnews Research, nearly one in three American homeowners are “house poor,” which means they spend at least 30% of their monthly income on housing expenses.

A rule established by the Department of Housing and Urban Development states that spending above that threshold puts families at risk of financial hardship.

Even mortgage-free homeowners are feeling the pinch. Creditnews Research data shows that one in five homeowners without a mortgage is still considered house-poor.

A recent study by Harvard’s Joint Center for Housing Studies reached a similar conclusion, showing that the number of house-poor homeowners increased by 3 million from 2019 to 2022.

Mortgage or not, a growing number of homeowners are struggling to make ends meet—and there's good reason why.

Regardless of their homeownership status, Americans have seen their costs of living increase by more than 20% since the pandemic. That includes renovation, insurance, and utilities, which make it harder to maintain a home.

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