Foreclosure Spike and Rising Delinquencies Add Distressed Supply
Key Questions
What is driving the recent spike in foreclosure filings?
Foreclosure filings rose 26% year-over-year to a six-year high, fueled by the end of forbearance programs and rising serious FHA delinquencies. Milliman data shows delinquencies at 4.5% following an FHA policy change.
How are delinquencies and distressed inventory affecting housing markets?
Rising delinquencies are adding distressed supply, particularly pressuring prices and margins in Sun Belt markets. Ground-truth research indicates some inventory may be undercounted, adding to supply concerns.
Could home prices face depreciation risks from these trends?
Inside Mortgage Finance notes a contrarian view of potential home price depreciation due to demographic demand shifts and increasing supply. The U.S. housing market faces a supply glut rather than a shortage, with inventories at decade highs.
Foreclosure filings +26% YoY to 6-year high. Serious FHA delinquencies rising; Milliman Q1 2026 report shows delinquencies at 4.5% due to FHA policy change. Distressed inventory entering after forbearance, pressuring prices/margins especially in Sun Belt. Ground-truth research suggests undercounted inventory. Inside Mortgage Finance flags contrarian possibility of home price depreciation from demographic demand decline and rising supply.