Foreclosure filings and repossessions of residential properties across the United States are on the rise — one of the latest signs the housing market is shifting.
In July, nearly 32,000 housing units in the country were subject to a default notice, scheduled auction or bank repossession, according to a report released Thursday by real estate data provider ATTOM. That’s an 18% increase in foreclosure activity on a monthly basis and a 0.2% increase compared to the same time a year earlier, and it translates to one in every 4,414 housing units with a foreclosure filing in July.
It’s a departure from the first half of the year when foreclosure activity was trending downward, and an indication of a growing inability to repay residential housing debt. Certain states may be facing “growing pressures,” Rob Barber, CEO of ATTOM, said in a statement.
Delaware had the highest rate of foreclosures last month. The state saw a 7.37% increase in foreclosure activity in the year ended in July. Nevada, Utah, New Jersey and Illinois were also among the five states with the highest foreclosure activity.
Those leaders aren’t much different from the states that led foreclosure activity in the first half of the year, with New Jersey, Illinois and Nevada appearing on both lists.
Lenders started the foreclosure process on 21,870 properties in July. That’s 18% more than in June and 4% more than the year prior. California, Florida, Texas, Illinois and New York had the greatest number of foreclosure starts.
At the same time, the number of closed foreclosures, measured as properties repossessed by lenders, also grew in July. Compared to the previous month, repossessions were up 14%. On an annual basis, though, lenders completed 2% fewer foreclosures.
Even so, foreclosure activity is still far below pre-recession averages. As of the second quarter, the national foreclosure activity level in the United States was 68% below the levels seen between 2006 and 2007.
But the recent uptick in foreclosures comes as home equity is nearing all-time highs. As home prices have grown, the share of mortgaged residential properties that have a combined amount of loan balances equal to less than half of their estimated market values has grown to nearly 50%, according to ATTOM data. Simultaneously, the share of mortgaged properties where the owner owed at least 25% more than the estimated market value of the property has fallen.
“Soaring home prices seem to continue and have spiked the value of homes across the nation, which boosts equity for homeowners at virtually every stage of paying off mortgages,” Barber said. “Monitoring these next few months will help us better understand the implications for the real estate sector.”