Foreclosure activity across the United States eased slightly in May 2026 from the prior month but continued its upward trajectory on an annual basis, signaling sustained financial pressure on a subset of homeowners. Property data firm ATTOM reported that 40,355 properties carried a foreclosure filing last month, encompassing default notices, scheduled auctions, and bank repossessions. That figure represented a 5% decline from April but a 14% jump compared with May 2025.
"While foreclosure activity eased from April levels, the broader trend remains one of gradual year-over-year growth," said Rob Barber, CEO at ATTOM. "Foreclosure starts and completed foreclosures both increased compared to last year, reflecting ongoing pressure on some homeowners as elevated mortgage rates, rising ownership costs, and affordability constraints persist. At the same time, foreclosure volumes remain well below historical norms, indicating that the housing market continues to show resilience despite these challenges." The national rate worked out to one filing for every 3,562 housing units.
Florida carried the heaviest foreclosure burden in May, recording one filing per 2,110 housing units. South Carolina came in second at one in every 2,287, followed by Maryland at one in 2,369, Nevada at one in 2,386, and Indiana at one in 2,516. Among the country's largest metro areas, Cleveland posted the worst rate, with one foreclosure filing for every 1,524 housing units. Baltimore, Tampa, Riverside, and Orlando rounded out the top five.
Lenders initiated the foreclosure process on 27,304 properties during the month, down 4% from April but up 13% compared with a year earlier. Texas generated the most foreclosure starts nationally with 3,590, ahead of Florida at 3,315, California at 2,530, Georgia at 1,161, and Illinois at 1,150. Not every market tracked upward. Santa Rosa, California saw foreclosure starts fall from 93 in May 2025 to just 21 this year, while Honolulu dropped from 68 to 30, and Seattle from 196 to 99.
Completed foreclosures, known as REOs, came in at 4,092 for the month, down sharply from April's pace but 6% higher than the same period last year. Texas recorded the most bank repossessions at 519, followed by California with 427, Florida with 340, Illinois with 223, and Michigan with 222. At the metro level, Chicago led REO completions with 204, trailed by Detroit at 124, Houston at 122, Dallas at 88, and New York at 84.
Despite the year-over-year increases in both starts and completions, ATTOM noted that overall foreclosure volumes remain significantly below pre-pandemic levels. This underscores how far the housing market has traveled from the crisis conditions of the previous decade, even as affordability pressures mount. For advisors, the data may inform discussions with clients about homeownership strategies and portfolio allocations amid a challenging rate environment.
The persistent rise in foreclosure activity aligns with broader trends in housing affordability. Elevated mortgage rates, which have hovered near multi-decade highs, continue to squeeze household budgets. A recent March mortgage data report showed a dip in overall delinquencies but a buildup in serious distress, suggesting that some borrowers are struggling to keep up with payments. Meanwhile, high-net-worth advisors have maintained real estate allocations despite the S&P 500's 75% surge over three years, indicating that property remains a key component of diversified portfolios.
As the Federal Reserve continues to navigate inflation and rate policy—with PPI surging 6% and rate hike odds climbing to 39%—the housing market's resilience will be tested. For financial advisors, monitoring foreclosure trends can provide insights into local economic conditions and client risk profiles, particularly in states like Florida, Texas, and California where activity is highest.
