Foreclosure Sales Rise to 2019 Levels

Foreclosed homes are becoming more common, reaching levels comparable to 2019, though still significantly lower than during the Great Financial Crisis. As of June 2026, the national foreclosure start rate is 0.24%, according to data from the Mortgage Bankers Association as reported by Moody's. Cities like Chicago, Philadelphia, Houston, Baltimore, and Phoenix currently have the highest number of foreclosure listings.

Buyers who purchased homes since 2023, when home prices stabilized, are considered at higher risk in the current market. This is because newer homeowners have less equity, with early mortgage payments consisting of more interest than principal. Additionally, their homes have not appreciated as much compared to those bought before the price surge of 2021 and 2022, according to Joel Berner, a senior economist at Realtor.com.

While foreclosure represents a difficult situation for previous owners, it can offer financial opportunities for buyers. Lenders often aim to recoup costs by selling these properties at an attractive price, typically the sum of the outstanding mortgage, interest, legal fees, and penalties. This often results in an asking price approximately 15% below the home's market value, and foreclosures frequently sell for less than their listed price.

However, purchasing a foreclosed property involves inherent risks. Potential buyers are advised to proceed with caution and carefully assess whether the potential benefits outweigh the risks involved in acquiring such a property. The process of foreclosure itself involves a lender taking ownership of a property when the homeowner fails to make mortgage payments or sell the home.