The residential foreclosure rates are accelerating in several key Sun Belt cities, signaling that the wave of homeowners that purchased properties in booming cities may be struggling with affordability increases.
The issue is most apparent in Austin, which had the highest annual foreclosure growth rate in April — nearly 199 percent, according to a TRD Data analysis of foreclosure data of metropolitan statistical areas with at least 1 million residents from research firm Attom. Austin’s rate was the eighth highest of the markets studied, with about 1 in every 2,000 homes having some type of foreclosure filing.
Raleigh, North Carolina followed, with a growth in its foreclosure rate of about 111 percent. The capital city’s foreclosure rate — 1 in every 3,158 homes has a foreclosure filing — was roughly in the middle of the pack among the markets analyzed.
Jacksonville, Florida had the highest foreclosure rate, of 1 in every 1,691 properties. That was about 43 percent higher than last year.
The surge in foreclosure rates in Austin, Raleigh and Jacksonville represent a stark change from the year prior. In April 2025, Austin’s rate had climbed just 10 percent, while Raleigh’s and Jacksonville’s fell, by nearly 8 percent and 3 percent, respectively.
Overall, the national foreclosure rate in April rose 18 percent year over year, per Attom’s methodology, which looks at housing units with default and auction notices and those that have been repossessed by banks. That shakes out to 1 in 3,388 homes with some type of foreclosure filing.
The year-over-year increase indicates more of a return to normal, as pandemic-era relief programs for borrowers helped bring foreclosures to low levels, said Rick Sharga, a residential mortgage expert who founded the advisory firm CJ Patrick Company. At the end of the first quarter, 0.6 percent of all mortgages were in the process of foreclosure, according to the Mortgage Bankers Association. Historically, about 1 percent of mortgages are in foreclosure, according to Sharga.
“The fact that we’re still sitting at half a percent today just tells you how carefully underwritten these loans have been over the last decade or so,” he said.
The Federal Housing Administration is also driving the increased foreclosure rate, Sharga said. FHA borrowers tend to be first-time homebuyers with lower cash reserves, higher debt-to-income ratios and lower credit scores. FHA loans also have a lower down payment minimum, of just 3.5 percent.
“If [FHA borrowers] do find themselves in financial difficulty, they just don’t have a lot of wiggle room to escape,” Sharga said.
Additionally, late last year, pandemic-era relief programs expired, adding to borrowers’ pressures. About 11.9 percent of FHA loans, excluding those already in foreclosure, were delinquent in the first quarter, according to the MBA.
The highest share of FHA loans are in the Sun Belt. Texas leads with about 16 percent of FHA loans, followed by Florida, with 11 percent. These markets are also where insurance rates and property taxes have risen, while home values have dropped after the pandemic-era buying frenzy.
“If you’re in Austin and you bought a property in late 2022 with a 3.5 percent-down loan, you’re basically underwater on your mortgage right now … it’s a little bit of a perfect storm brewing in the FHA market right now,” Sharga said.
Sharga expects the foreclosure rate to rise over the next year as the market continues to return to baseline. But much also depends on the country’s employment situation. In April, the unemployment rate in the U.S. was 4.3 percent, the same as the month before.
“As long as the jobs market is reasonably stable and unemployment doesn’t jump too much, we’re probably not going to see a huge increase in mortgage delinquencies or mortgage defaults,” he said.