This week, real estate data firm ATTOM reported that foreclosure activity — which includes default notices, auctions, and bank repossessions — was up 18% in August compared to a year ago. In fact, foreclosure activity on properties across the U.S. has been rising for the past six months.

It’s not up to pre-pandemic levels, but it does signal more trouble in the economy.

The Mortgage Bankers Association does its own tracking of serious mortgage delinquencies and foreclosure filings, and saw an uptick in the second quarter compared to 2024 — though not as dramatic as ATTOM’s data for August shows.

MBA chief economist Mike Fratantoni said the uptick in homeowners in trouble is being driven by economic weakness, especially stalling job creation and rising unemployment.

“People pay on their mortgages when they’re employed,” he said. “They lose their job, they’re much more likely to become delinquent.”

He thinks homeowners have a hard road ahead if they lose a job at this point. “It’s becoming much tougher to find a new one. And it’s not like a lot more folks are becoming delinquent on their mortgage, but for folks that are falling behind, they’re having a more difficult time catching up.”

Especially with FHA loans, which generally go to first-time buyers with lower down payments. More than 10% of those mortgages are now delinquent.

Challenges for those households are mounting, he said: “The slowing job market, student debts that are required to be paid once again, rising consumer delinquencies in auto and credit cards.”

Still, overall, foreclosure levels remain lower than they were before the pandemic. So, Bankrate housing analyst Jeff Ostrowski isn’t overly alarmed about the August uptick.

“Sounds a little bit jarring at first, I mean ‘double-digit increase in foreclosures’ must be a bad thing. But really, this is just one more way that the housing market is returning to something like normalcy,” he said.

Following the pandemic, when interest rates fell to rock bottom, house prices soared, and homeowners could pause their mortgage payments.

“Throughout the pandemic, there were essentially no foreclosures, so there’s some little catch-up for the housing market to get back to normal,” Ostrowski said.

Since lending standards were tightened after the financial crisis, he added that the vast majority of mortgage-holders now have high credit scores. “Most homebuyers are in a very solid position financially. Most have gained a lot of equity.”

So, they can just sell if they can no longer pay the mortgage.

There will be some unlucky folks who bought in the last few years — at a high home price, paying a 7% (or more) mortgage — and face heightened foreclosure risk, warned Chris Mayer at Columbia Business School.

But “remember you have a ton of people still sitting on 3% mortgages or below,” he said. “If you look at data on the mortgage payment-to-income ratio, it’s near historic lows.”

Meaning, a lot of homeowners are buffered from being overwhelmed by their mortgage payments, even in an economic downturn.