US housing market sees rising foreclosures and modest starter‑home affordability gains

Foreclosure filings in the United States jumped 21% year‑over‑year to about 228,000 in the first half of 2026, the highest mid‑year total since 2019. The increase follows the end of pandemic‑era mortgage relief, higher property‑related costs and a normalization of distressed inventory, with bank‑owned (REO) homes representing 1.3% of active listings in April 2026 – the highest share since 2020. Regions such as Lake Charles, Louisiana, show the greatest concentration of lender‑owned inventory.

At the same time, starter‑home affordability is showing small improvement. The typical entry‑level home price rose from $256,000 in 2019 to $344,000, while the share of homes priced below $350,000 fell from 55% to 37.6%. Mortgage‑rate pressure pushed the income needed to qualify from $43,000 to $78,000, raising the average age of first‑time buyers to 40. More than 220,000 additional starter homes are on the market compared with 2022, and prices slipped 4.2% thanks largely to new construction in the South.