Home foreclosures rose 7% in April, with more than 35,000 Americans unable to make their payments
Home foreclosures rose 7% in April, with more than 35,000 Americans unable to make their payments: homeowners in Florida, California and Texas were hardest hit
- Florida had the most foreclosures in May with 2,901 home foreclosures
- Inflation rates and rising interest rates are blamed for cost-of-living pressures for Americans
Home foreclosures nationwide were up 7 percent last month, up 14 percent from a year ago, as the cost of living continues to stall.
The number of foreclosure-related applications, including notices of default, scheduled auctions and bank repossession, rose to 35,196 properties according to new data from ATOM.
Florida had the most foreclosures in May with 2,901 foreclosures initiated.
This was followed by California, which has initiated 2,451 bankruptcies, and Texas, which has initiated 2,286 property foreclosures.
ATTOM CEO Rob Barber said in a statement that “the recent increase in bankruptcy filings across the country indicates a trend that has been observed throughout the year and what we expected.”
Barber explained that the “upward trajectory suggests the possibility of continued increased activity, and with foreclosure completions seeing the largest monthly increase this year, we will continue to monitor the potential impact of this on the housing market.”
Home foreclosures nationwide were up 7 percent last month, up 14 percent from a year ago as cost of living continues to stall
Despite the surge in bankruptcy filings, Fitch analysts argue it is just a “normalization process” after the very low levels seen during the pandemic as consumers benefited from loan forgiveness and government support.
However, inflation is still running high with the latest figures from the US Bureau of Labor Statistics showing that annual inflation is now at 4.9 percent.
Despite falling from its peak of 9.1 percent in June 2022, inflation is still putting significant strain on household finances, likely contributing to the upswing of households unable to keep up with mortgage payments.
Adjusted for inflation, US worker incomes remain below pre-pandemic levels.
The cost of living in Florida has risen since the pandemic, the state with the highest number of bankruptcies last month, with real hourly wages in the state falling from $25.12 in February 2020 to $24.82 in April, according to analysis by NBC News.
Interest rates have also risen rapidly over the past year with the Federal Reserve’s latest hike in May pushing the base rate to 5.25 percent, putting pressure on mortgage rates after a decade of ultra-low rates.
The Fed has hinted that interest rates will have to stay high for longer to keep inflation under control.
βIt is likely that bankruptcy filings will continue to rise, but not as we saw when the bubble burst in 2008,β Barber added.