The U.S. foreclosure market experienced a significant uptick in Q3 2023, with foreclosure rates showing a steep quarterly and annual rise, according to the latest report from ATTOM.
The report highlighted a 28% surge from the previous quarter, totaling 124,539 U.S. properties with foreclosure filings. This represents a 34% increase from the same period last year. In September 2023 alone, filings spiked to 37,679, marking an 11% jump from August and an 18% increase year over year.
Lenders started foreclosure on 68,961 U.S. properties in Q3 2023, down 1% from the previous quarter but up 3% from a year ago — nearly reaching pre-pandemic levels. States witnessing the most substantial annual hikes in foreclosure initiations included North Carolina (53%), Louisiana (47%), Pennsylvania (24%), Alabama (18%), and Nevada (16%).
Rob Barber, CEO at ATTOM, noted the escalating trend but put it in perspective.
"The number of new cases filed by lenders in the third quarter did rise just a small amount from the same period last year and actually dipped a bit quarterly - signs that the upward pattern may be easing," Barber said. "But foreclosure starts are nearly back to where they were two years ago when the federal government lifted a pandemic-related moratorium on most foreclosure filings. This rise in foreclosures might also be attributed to pending filings finally processing. Even with the national economic upturn and job stability, it's evident that some homeowners are still grappling with the pandemic's financial aftermath or encountering new challenges."
Major metropolitan areas, like New York, Chicago, Houston, Los Angeles, and Philadelphia, reported the highest numbers of foreclosure starts in Q3. However, several cities, including Salt Lake City, Chicago, Kansas City, Columbus, and Milwaukee, bucked the national trend, witnessing decreases in foreclosure commencements.
New Jersey, South Carolina, and Delaware reported the steepest foreclosure rates nationwide. Specifically, one in every 595 housing units in New Jersey faced a foreclosure filing in the third quarter.
Bank repossessions also saw an upward trajectory, with 11,020 properties reclaimed through foreclosure in Q3 — a 9% leap from the second quarter and a 5% increase year over year.
The time taken to finalize foreclosures witnessed a significant reduction, averaging 778 days — the shortest span since Q2 2020. States with protracted timelines included Louisiana, Hawaii, New York, Nevada, and New Jersey. States like Texas, Montana, Wyoming, Missouri, and Michigan reported the quickest foreclosure completions.
As lenders and policymakers grapple with these escalating numbers, many homeowners remain on the brink, awaiting clearer solutions to their mortgage woes.
