County-level housing data shows that foreclosure activity and unemployment trends are becoming key warning signs for markets that may be more vulnerable to future price declines.
As affordability remains a challenge nationwide, some areas in Florida, California, Illinois, and New Jersey are showing higher levels of housing market risk heading into the rest of 2026.
Housing Risk Remains Concentrated in Key States
According to ATTOM’s latest Housing Risk Report, housing market vulnerability remained concentrated in parts of Florida and California during the first quarter of 2026.
The report analyzed 580 counties across the U.S. using several key indicators, including foreclosure activity, seriously underwater mortgages, housing affordability, and unemployment rates.
Florida accounted for 12 of the 50 highest-risk counties, while California had 9. Illinois and New Jersey each had 5 counties included in the highest-risk list.
Foreclosures and Unemployment Are Major Warning Signs
The report found that markets with higher foreclosure activity and weaker employment conditions were more likely to show signs of housing risk.
Counties were evaluated based on:
The percentage of homes facing possible foreclosure
The share of seriously underwater mortgages
The percentage of local wages needed to cover homeownership costs
Local unemployment rates
While affordability remains a national concern, foreclosure activity and unemployment appear to be two of the strongest indicators of local housing market vulnerability.
Affordability Continues to Challenge Buyers
ATTOM reported that the national median home sales price reached $360,000 during the first quarter of 2026.
Major ownership expenses on a median-priced home consumed 30.3% of the typical American worker’s annual wages, showing that affordability remains a major challenge for many homebuyers.
Some of the least affordable markets were concentrated in New York and California, where ownership costs required a much larger share of local wages.
Underwater Mortgages Remain a Concern in Some Areas
Nationwide, 3.2% of homes were considered seriously underwater, meaning the outstanding loan balance was at least 25% higher than the property’s estimated value.
Louisiana had several counties with the highest shares of seriously underwater mortgages, showing that local market conditions can vary greatly from one region to another.
Some Markets Continue to Show Strength
Not all markets are facing the same level of risk. ATTOM found that some of the least risky counties were located in Tennessee, Virginia, Wisconsin, Michigan, Vermont, Indiana, and Maine.
These stronger markets were supported by healthier employment conditions, lower foreclosure activity, and smaller shares of underwater mortgages.
The housing market continues to shift, and local data matters more than ever. While affordability remains a concern nationwide, foreclosure trends and employment conditions may help identify which markets are more vulnerable to future price changes.
For buyers, sellers, and investors, staying informed can help you make smarter and more confident real estate decisions.
Source: nationalmortgageprofessional.com
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