Nearly 20 years have passed since the 2008 housing crash, but the mention of foreclosure can still bring back concerns about another housing market downturn. If you're thinking about buying or selling, you may be wondering whether a rise in foreclosures could lead to a surge of homes hitting the market, especially with recent headlines bringing the topic back into focus.
Some buyers may be anticipating more opportunities to find a bargain, while sellers might be worried about facing additional competition. However, the latest data tells a different story. Understanding what's actually happening can help you make informed decisions and approach your next move with greater confidence.
A Modest Rise from a Low Starting Point
According to ATTOM, completed foreclosures increased by 33% compared to the same period last year. While that may seem like a significant jump, it's important to look at the broader context.
Despite the increase, foreclosure activity remains approximately 26% below the levels recorded during the first half of 2020.
Looking back even further makes the difference clearer. Today's foreclosure activity is still a small fraction of what the housing market experienced during the 2008 crash. ATTOM reports that lenders completed approximately 28,000 foreclosures during the first half of 2026. During the housing crisis, however, monthly totals frequently exceeded 200,000 over just a few months (see graph below):
Housing experts say the latest figures point to a market that remains relatively healthy. As Rob Barber, CEO of ATTOM, explains:
“While some homeowners are still facing financial challenges, overall foreclosure volumes remain well below historical norms and the broader housing market continues to demonstrate resilience.”
So why can the housing market handle the modest increase in foreclosures we're seeing today? There are a few important factors that help explain it.
Homes for Sale Are Back in a Balanced Range
During the 2008 housing crisis, many homeowners lost their properties to foreclosure or had to sell under financial pressure. This caused a surge in available homes and left the market with far more supply than buyers could absorb. We're not seeing the same situation today.
A useful way to understand the difference is by looking at months of housing supply. This measure estimates how long it would take to sell all the homes currently on the market if sales continued at their existing pace. Generally, a supply of four to six months indicates a balanced market.
According to the National Association of Realtors (NAR), the current supply is approximately 4.8 months. That's within the range of a balanced market and less than half the level recorded near the peak of the last housing crash (see graph below):
If foreclosures were increasing at a much faster pace, we would expect to see a noticeable jump in the number of homes available for sale. As Logan Mohtashami, Lead Analyst at HousingWire, points out:
“. . . a surge of actual foreclosures in 2026 would have easily put the inventory data much higher in 2026.”
Equity Gives Today’s Homeowners Options
Homeowner equity is another major reason we're not seeing a wave of distressed sales. Data from the Census Bureau and ATTOM shows that nearly two out of every three homeowners either own their homes outright or have more than 50% equity. Meanwhile, Cotality reports that the average homeowner has approximately $310,000 in home equity.
This financial cushion gives homeowners more options if they run into financial difficulties. Rather than facing foreclosure, someone with substantial equity can often sell their property, pay off the remaining mortgage, and still walk away with money. That's a significant difference from the conditions during the last housing crash.
Back in 2010, nearly one in four homes had negative equity, according to HousingWire. Being underwater means owing more on a mortgage than the property is currently worth, making it much harder for homeowners to sell without taking a financial loss.
Today, the situation looks very different. Just 2% of homeowners are considered seriously underwater (see graph below):
While some homeowners may not have built up significant equity, the majority are in a much stronger financial position. This helps limit the potential for a widespread increase in foreclosures and keeps the market from experiencing the kind of distress seen during the last housing crash.
Bottom Line
If recent headlines about rising foreclosures have you wondering what's ahead for the housing market, the latest data offers some reassurance. Housing inventory remains relatively balanced, and most homeowners have built up substantial equity, putting today's market in a much stronger position than it was during the 2008 crash.
If you have questions about current housing trends, what's happening in your local market, or how much equity you've built in your home, reach out to Holly & Chris. We're here to help you make sense of the numbers and understand what they mean for your next move.
