Foreclosures continue to rise toward pre-pandemic levels, according to new data from CoreLogic, but mortgage delinquencies are down. This is a positive sign, indicating that foreclosures will likely trend downward soon.

CoreLogic’s recent Loan Performance Insights report provides a deep look delinquency data for October 2022 with year-over-year comparisons. Although homes in some state of foreclosure rose from 0.2% to 0.3% during October, year over year, just 2.8% of all U.S. mortgages were in some stage of delinquency. This marks the 19th straight month of delinquency decline, nearing the lowest rate in over two decades.

“We like to look at those early delinquencies for warning signs,” said Molly Boesel, the principal economist at CoreLogic. Whereas foreclosures reflect older information — it is a slow process — delinquencies highlight the degree to which current borrowers may be struggling, she said.

In particular, Boesel said, the earliest delinquency period (between 30 and 59 days) is of primary concern. This subsection says a lot about what to expect for future foreclosures. And in the case of October 2022, the foreclosure rate increased from 1.2% to 1.3% year over year. But a press release from CoreLogic attributes this directly to the impact of Hurricane Ian on Florida homes.

“The Punta Gorda and Cape Coral metro areas on Florida’s Gulf Coast saw early-stage mortgage delinquencies triple,” Boesel stated in the press release. And that unusual spike can account for the nationwide uptick of 0.1%. But judging by the effects of past storms, Bosel believes that delinquencies in those metros will decrease between the next six to 12 months. It’s unlikely they will make it to the early stages of foreclosure.

Following the Florida metros of Punta Gorda and Cape Coral-Fort Myers, the areas which saw the largest increase in overall delinquency were Iowa City, Iowa (a 0.4% increase); Cedar Rapids and Lima, Ohio (both up 0.2%); and Decatur, Illinois (up 0.1%).

Accordingly, the Chicagoland area did not fare well, with the foreclosure of one in every 2,221 housing units. It was the No. 2 metro in this category, trailing only Cleveland, Ohio. During the same time period, Chicago saw 278 completed foreclosures (REOs).

Meanwhile, the rates of serious, late-stage delinquency shrunk nationwide in all U.S. metros. The largest decreases were seen in Texas, but in Chicagoland, the improvements were also notable. The rate of serious delinquencies dropped from 2.7% to 1.6% between 2021 and 2022 — even as foreclosures rose from 0.3% to 0.5% during that same time period.

Because of these opposing trends, looking at the number of foreclosures alone can be misleading. For example, the 0.3% of U.S. foreclosures counted in October 2022 comes out to approximately 150,000 mortgages. That’s a big leap from 2021, when homes were just exiting the pandemic forbearance. But still, it lags the 219,000 mortgages that were in foreclosure during October 2019, according to CoreLogic.

Similarly, a report from ATTOM that focused on November 2022 found that while foreclosure starts during November dwarfed last year’s numbers, they were just above 80% of pre-pandemic levels. Nationwide, ATTOM counted 30,677 new foreclosure filings: up 57% year over year but down 5% from the month prior.

That month-over-month data is especially revealing. “While foreclosure starts and foreclosure completions both increased compared to last year’s artificially low levels, they declined from last month,” Rick Sharga, executive vice president of market intelligence at ATTOM, said in the report, concluding: “We may be at or near a peak level of foreclosure activity for 2022.”

Among those recent foreclosures, though, Illinois played a major role. According to ATTOM, it was the No. 1 state for new foreclosure filings. One in 2,401 Illinois housing units was foreclosed on during November, followed by, in order: Wyoming, South Carolina, New Jersey and Delaware. 

Although these numbers are still comparatively low, Boesel says the fact that foreclosures have risen at all is some cause for concern. “It still represents borrowers who are in trouble and are losing their homes.” But she also offered a silver lining: today’s home equity.

“Home prices have been going up for more than a decade, which has left borrowers with high amounts of home equity,” Boesel said. “This is one of the reasons that the general foreclosure rate is as low as it is. If a borrower should get into trouble, most likely they have enough home equity to sell the home they’re in instead of just leaving the home.” Comparing this moment to the peak of foreclosures in January 2011 — when about 1.8 million homes were foreclosed on — Boesel said it is a rare moment in the market.