The nation’s largest title insurance underwriter isn’t too worried about rising foreclosures and softening U.S. home prices — at least for now.

First American Financial Corp., which collected roughly one-quarter of title insurance premiums generated during the first quarter, said home prices fell in June across more than 40% of the U.S.’s largest metros, according to its latest Real House Price Index (RHPI).

Despite declining prices, housing affordability actually worsened for its fourth consecutive month, the company said Monday.

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“Even after the recent pullback, however, affordability remains approximately 5% better than one year ago,” noted Mark Fleming, chief economist for First American, in commentary accompanying the report. The RHPI reflects changes in house prices adjusted for changes in consumer homebuying power relative to income and mortgage rates.

Over the past four months, mortgage rates have risen sharply in response to inflationary impacts of the ongoing Iran war, as well as investor concerns that have pushed up yields on longer-dated U.S. Treasurys to which mortgage rates are benchmarked.

Meanwhile, the annual pace of inflation as measured by the consumer price index has outpaced annual growth in hourly earnings every month since February, when the Iran war began, according to data from the U.S. Bureau of Labor Statistics (BLS).

Higher borrowing costs and declining wages when adjusting for inflation have eroded consumer purchasing power for several months. That has offset some affordability improvements from declining home prices, which remained 52% higher than February 2020 levels across the 50 largest U.S. metros as of June, said First American.

“Beneath the national trend, the mix of factors driving affordability is shifting from market to market,” added Fleming.

Conditions not present for ‘foreclosure wave’

National house price growth cooled to 1.1% year over year in June, the RHPI indicated. Fleming said homebuying affordability remained 5% better nationwide than last year’s levels in June, helped by year-over-year price declines in 22 of the 50 largest U.S. markets.

Ongoing cooling in home price appreciation comes at a time when foreclosure activity has risen meaningfully from artificially low pandemic-era levels. Housing experts broadly describe rising foreclosure and delinquency trends as normalization, though pockets of stress have emerged in post-2022 and government-insured originations.

Real estate analytics firm Attom has reported that foreclosure activity in July was 10% higher than a year ago, while total foreclosure activity through the first six months of 2026 was 21% higher than the first half of 2025.

But Fleming sought to allay concerns that a foreclosure crisis could emerge, saying that “falling prices also have a way of reviving memories of the last housing downturn.” Historically high levels of mortgage borrower equity and resilient employment trends have made that kind of downturn unlikely.

“A foreclosure wave requires two triggers,” said Fleming. “Homeowners who can no longer pay and lack sufficient equity to sell. For now, those triggers remain far apart.”

ICE Mortgage Technology reported earlier in August that mortgaged homeowners had $18 trillion in cumulative home equity, roughly $11.7 trillion of which was available to be withdrawn while maintaining a 20% equity cushion.

The unemployment rate ticked down to 4.1% in July, its lowest level of the year, according to BLS. The jobless rate has been in the low-4% range since the summer of 2024.

For now, offered Fleming, easing home prices should be taken as a positive sign for a market that has struggled to recover from 30-year lows for four consecutive years.

“From an affordability perspective, some of that adjustment is welcome,” he said.