Foreclosure surge sweeps the Sun Belt as Realtor.com reviews the 10 worst U.S. states

Rising insurance costs, stagnant equity, and regional economic stress push foreclosure filings higher for a 12th straight month, Realtor.com reveals

Justin Sullivan / Getty Images

The American housing market has been flashing warning signs for a year straight.

Foreclosure filings rose for a 12th consecutive month and 20% year over year in February 2026, according to ATTOM, a real estate analytics curator that analyzes property data. Last month alone, 38,840 properties carried a foreclosure filing, involving a default notice, a scheduled auction, or a completed bank repossession. The math works out to one in every 3,701 housing units nationally.

The headline number is striking, but context matters. The data reflects a gradual normalization after the historically suppressed foreclosure activity of the pandemic era, when federal moratoriums and forbearance programs kept filings artificially low, ATTOM CEO Rob Barber told Realtor.com. Even with the sustained climb, overall levels remain below long-run historical norms.

The national figure also obscures the stark geographic unevenness of the distress. Midwestern and Southern states are absorbing the bulk of the pressure, with individual state rates diverging sharply from the national average. Indiana's foreclosure rate, for instance, is now double the U.S. figure — a gap wide enough to raise serious questions about local economic conditions, pandemic-era buying decisions, and the structural affordability challenges that have since emerged.

Realtor.com's analysis of ATTOM's Foreclosure Market Report tracks where distressed inventory is rising fastest. But buyer beware: Foreclosed properties are sold as-is, often carrying deferred maintenance, aging systems, or back-tax liens. In competitive markets, new construction can ultimately be the more affordable option, as builders frequently offer mortgage rate buydowns and cover closing costs.

Here are the 10 states with the highest foreclosure rates in February 2026, ranked from worst to least severe.

Jeremy Hogan / Getty Images

Indiana posted the worst foreclosure rate in the country in February, with one in every 1,597 housing units carrying a filing. That's twice the national average. Lenders initiated 1,197 new foreclosure proceedings in the state last month, placing it fifth nationally for starts, while bank repossessions surged 35% year over year to 4,077 completed foreclosures nationwide, according to Realtor.com.

Micah Green / Bloomberg via Getty Images

South Carolina recorded one foreclosure filing for every 2,217 housing units, placing it second in the country. The state's rate reflects broader Southeastern pressures, where pandemic-era home price appreciation has outpaced wage growth, squeezing homeowners who bought near the market's peak.

Octavio Jones / Getty Images

Florida holds the No. 3 position for the second consecutive month, with one filing per 2,277 housing units, and ranks second nationally for new foreclosure starts at 3,250. Soaring insurance costs and mandatory structural inspections in older condo buildings have put a heavy burden on homeowners, Coldwell Banker Vanguard Realty broker Cara Ameer told Realtor.com. Buyers who purchased property at elevated prices during the pandemic boom have also had little time to build equity.

Visions of America / Joseph Sohm / Universal Images Group via Getty Images

Delaware, which led the country in January, saw its rate ease slightly to one filing per 2,443 housing units. But the number is still the fourth highest in the U.S. The state's brief tenure at the top of the distress ranking signals how quickly regional conditions can shift, even within the broader upward trend.

Talia Sprague / Bloomberg via Getty Images

Illinois rounds out the top five with one foreclosure filing per 2,590 housing units. The state's chronic affordability challenges — particularly in the Chicago metro — have long made it a persistent presence in national foreclosure rankings.

Megan Jelinger / SOPA Images / LightRocket via Getty Images

Ohio recorded one filing per 2,787 housing units in February, placing it sixth in the country. The state's Rust Belt legacy of population loss, stagnant incomes, and aging housing stock continues to contribute to elevated mortgage distress.

Yuvraj Khanna / Bloomberg via Getty Images

New Jersey comes in seventh at one filing per 2,798 housing units. The state has long carried a heavy foreclosure load, partly due to its lengthy judicial foreclosure process, which keeps cases in the pipeline longer than in non-judicial states.

Roger Kisby / Bloomberg via Getty Images

Nevada posted a rate of one filing per 2,915 housing units. Heavily reliant on tourism and hospitality, the state's economy remains more sensitive to economic shocks than more diversified markets, leaving some homeowners with thin financial cushions.

Steve Wilson / Getty Images

Utah recorded one filing per 2,984 housing units, a notable result for a state that saw explosive home price growth during the pandemic. Buyers who stretched to enter one of the country's fastest-appreciating markets are now among the most exposed to payment stress as values cool.

 Jordan Vonderhaar / Bloomberg via Getty Images

Texas rounds out the list at one filing per 3,156 housing units. The state leads all others in both new foreclosure starts (3,390) and completed repossessions (453) in February, reflecting the sheer size of its housing market as much as the depth of its distress.

© Quartz