U.S. Housing Market Risk Intensifies – NMP Skip to main content

U.S. Housing Market Risk Intensifies

Jan 06, 2026
Housing Market Risk Intensifies

ATTOM finds affordability strains, rising foreclosures, and elevated unemployment pushing several U.S. housing markets, led by inland California counties, into heightened downturn risk in Q3

A new analysis from ATTOM, the Q3 2025 U.S. Housing Risk Report, identifies the county-level housing markets most vulnerable to downturns in the third quarter of 2025, highlighting persistent affordability pressures, elevated unemployment, and foreclosure activity across several regions of the country.

The report uses a combination of metrics — including the proportion of median income required to afford homeownership, the share of seriously underwater mortgages, foreclosure rates, and local unemployment — to assess housing market risk nationwide.

“A lot of attention has, deservedly, gone to affordability concerns stemming from the rising price of homes,” said Rob Barber, CEO of ATTOM. “But what really separated the riskiest markets in our third quarter assessment were their high rates of foreclosures and unemployment.”

Among the highest-risk housing markets, California counties dominate the list, with six of the top 10 slots. Butte County, California, ranks as the most at-risk market, where homeownership costs consume nearly half of median income, and foreclosure filings are comparatively high. Humboldt and Shasta Counties in California also rank among the top risk counties, along with El Dorado, Solano, and Madera Counties, reflecting broad stress across inland and non-coastal California regions.

“If a community is losing jobs, those homeowners will find it harder to pay their monthly mortgage bills,” Barber added. “That means more foreclosures, which can hurt the broader local housing market.”

In Florida, Charlotte County emerges as a significant outlier, with a notably high percentage of properties underwater, paired with elevated foreclosure activity. Louisiana’s Tangipahoa Parish also appears among the top 10, exhibiting some of the highest levels of underwater mortgages in the dataset. 

New Jersey contributes two counties to the riskiest cohort: Atlantic County and Cumberland County. Both record relatively high unemployment rates compared with national averages and foreclosure levels above thresholds seen in lower-risk markets. 

ATTOM’s risk index contrasts sharply with markets at the other end of the spectrum. Least-risky counties — including Berkeley County, West Virginia; Chittenden County, Vermont; and Erie County, New York — report unemployment at or below 4% and foreclosure levels far below national norms, underscoring the divergent conditions across U.S. housing markets. 

The broader housing market context in Q3 2025 also shows signs of stress beyond these high-risk counties. U.S. foreclosure filings have risen in recent quarters, with ATTOM’s foreclosure market data indicating a year-over-year increase in properties entering default, foreclosure starts, and real estate-owned (REO) status. National foreclosure activity climbed approximately 17% in Q3, reflecting mounting borrower strain in some regions. 

Mortgage origination trends further suggest cooling demand. Data from industry sources show total mortgage originations dipped in the third quarter of 2025, even as refinance and home equity line of credit (HELOC) activity rose modestly. The decline signals softer purchase demand amid persistent affordability challenges.

Regional patterns in housing risk are consistent with previous analyses showing heightened vulnerability across the southern and western U.S. Previous housing risk assessments from ATTOM and other analytics sources have similarly identified California and southern states as focal points of housing market stress, driven by high costs, foreclosure activity, and employment metrics that lag national averages.

About the author
Published
Jan 06, 2026
Short Sales Now Recover More Value Than Foreclosures

Realtor.com finds short-sale activity accelerating, though the transactions represented just 0.6% of typical home sales in 2025

Jul 17, 2026
Chrisman: Why Do Mortgage Rates Care About Inflation?

When prices rise, bond values fall — here’s the mechanics behind why inflation drives mortgage rates higher

Jul 15, 2026
AD Mortgage Closes Fifth Non-QM Securitization Of 2026, Betting Big On Geographic Diversification

A $432.4 million deal backed by over 1,000 loans shows investors are still hungry for Non-QM paper — but the real story is where the loans are coming from

Jul 15, 2026
Mortgage Apps Fall As Rates Hit Highest Level Since August 2025

Purchase demand softened while refinance activity continued to show resilience despite higher borrowing costs

Jul 15, 2026
Foreclosure Inquiries Reach Highest Level Since 2020

LegalShield points to rising homeowner distress following the expiration of pandemic-era FHA relief programs

Jul 14, 2026
Home Prices Set New Record In June

Redfin reports record home prices as existing-home sales reached their highest level since 2022

Jul 14, 2026