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Home foreclosures are at their highest level since the start of the pandemic as the 'financial aftermath' take a toll on buyers

A home foreclosure sign.
A home foreclosure sign.Reuters
  • Home foreclosure activity is surging in the US, attesting to financial pain among homeowners.

  • Foreclosure filings jumped 34% over the past year to the highest level since the start of the pandemic.

  • That comes amid an already-precarious time for the US housing market, which has been slammed by high rates.

Home foreclosure activity in the US  surged to the highest level since the start of the pandemic, a sign that the financial aftermath of COVID-19 has been wearing out cash-strapped homeowners.

Foreclosure filings – including default notices, scheduled auctions, and bank repossessions – jumped 28% in the third quarter from the prior quarter to 124,539, the real estate data group ATTOM said in a recent report. That represents a 34% surge from a year ago, attesting to growing financial distress among US homeowners.

And foreclosure activity appears to have been increasing steadily through 2023. September alone saw an 11% jump in foreclosure filings to 37,679, up 18% from September of last year, researchers added.

Mortgage lenders, meanwhile, began the foreclosure process on 68,961 properties in the US over the past quarter, up 3% from the third quarter of 2022.

That rise is partly attributed by the end of mortgage forbearance and foreclosure moratorium programs brought about during the pandemic, which were rolled back during 2021 and 2022. That exposed a number of households that have been strained financially in the post-pandemic economy, with inflation still hovering well-above the Fed's 2% target.

"Foreclosures are on the rise again this quarter, as indicated by our latest foreclosure numbers," ATTOM CEO Rob Barber said in a statement on Thursday. "Even with the national economic upturn and job stability, it's evident that some homeowners are still grappling with the pandemic's financial aftermath or encountering new challenges."

Economists have warned that American consumers could grow even more strained over the following quarter, particularly as student loan payments resume. Making those payments could put more pressure on households' finances, especially considering that 34% of borrowers say that they not be able to make their student loan payments at all, according to a recent Morgan Stanley survey.

Those stressors come amid an already-precarious time in the housing market, where sales have shuddered to a near-halt as high mortgage rates push buyers and sellers to the sidelines. High rates have also contributed to the dearth of available housing inventory, which has also boosted home prices.

Read the original article on Business Insider

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