Foreclosures Ease in The Third Quarter

New foreclosure filings in the U.S. fell from July to September, signaling that widespread distress in the real estate market is largely retreating. According to a new report from Attom, the number of properties with foreclosure filings decreased compared to the previous quarter and dropped by double digits year-over-year.

Attom reported that 62,380 properties entered the foreclosure process in the third quarter, reflecting a 10% decrease compared to last year, while bank repossessions fell by 12% over the same period.

“Moving forward, we anticipate foreclosure levels will stay relatively low, though localized increases may occur in areas grappling with affordability or other market pressures,” said Rob Barber, CEO of Attom. “While we’re seeing a decline in foreclosure starts and repossessions, it’s crucial to remain vigilant, as any economic disruptions or interest rate changes could shift the current trend.”

Although the foreclosure rate—measuring the number of units with a foreclosure filing relative to the total housing inventory—dropped 13.4% overall, some states saw significant spikes. Vermont experienced a 163% increase in foreclosure rate compared to last year, while Utah saw a 72% rise. Conversely, Alaska, Montana, and West Virginia posted the largest declines, with foreclosure rates down at least 52%.

Attom found that the largest concentration of foreclosure starts in the third quarter occurred in the nation’s biggest metros: New York, Los Angeles, Chicago, Miami, and Houston. However, the states with the highest foreclosure rates, as a fraction of housing inventory, were Illinois, Nevada, Florida, Delaware, and South Carolina.

The average number of days properties in foreclosure spent in proceedings during the third quarter was 815, marking a 6% increase from last year. However, states like Louisiana, Hawaii, New York, and Rhode Island had far longer timelines, averaging 3,520 days, 2,531 days, 2,087 days, and 1,880 days, respectively.

While Barber acknowledged that systemic risks could affect foreclosure filings in local markets, Attom’s data shows the number of properties with filings has remained mostly stable since 2022 and continues to stay below the five-year average. A sharp drop in filings occurred in the first quarter of 2020, followed by a slow climb until mid-2022.