Weekly Real Estate News
Property-tax delinquency among U.S. homeowners who pay taxes outside escrow has climbed to its highest level since 2017, adding another warning sign to a housing market already strained by elevated borrowing costs and rising ownership expenses.
According to Cotality’s 2026 Property Tax Delinquency Report, the year-to-date national delinquency rate reached 5.2%. That remains below the 5.4% long-term average for 2012 through 2025, but it represents a marked reversal from the unusually low delinquency levels recorded in recent years.
The study is based on roughly 15 million tax-reporting events tied to 8 million mortgages in which borrowers pay property taxes directly rather than through an escrow account. That distinction matters: the findings do not describe every mortgaged homeowner in the country, and they should not be read as a national mortgage-delinquency rate.
Local conditions matter more than unemployment
Cotality found striking persistence in state-level delinquency patterns. A state’s delinquency rate was highly correlated with its rate in the prior year, with a correlation coefficient of 0.90. The relationship was more moderate for HOA liens, at 0.56, and mortgages at least 90 days delinquent, at 0.54.
The report found no similarly meaningful relationship with state unemployment rates, suggesting that local tax burdens, collection practices and broader homeownership costs may explain more of the state-to-state differences than labor-market conditions alone.
Mississippi posted the highest 2025 delinquency rate at 15.1%, followed by Kansas at 9.6%, New Jersey at 9.5%, Louisiana at 9.0% and Massachusetts at 8.9%. At the other end of the spectrum, North Dakota recorded 1.4%, Wisconsin 1.5%, Wyoming 1.6%, Illinois 2.1% and Minnesota 2.3%.
Louisiana recorded one of the sharpest deteriorations, moving from 5.8% to 9.0%. New Mexico moved in the opposite direction, falling from 9.4% to 5.4%.
Collection systems show a measurable difference
The mechanics of tax collection also appear to matter. Cotality reported an average delinquency rate of 6.1% in tax-lien states, compared with 4.5% in tax-deed states. In a tax-lien system, an investor may acquire a lien certificate for unpaid taxes while the homeowner retains a redemption period; tax-deed systems can move more directly toward a sale of the property, subject to state law.
For mortgage servicers and lenders, the findings are important because unpaid property taxes can become a threat to collateral even when a borrower remains current on the mortgage itself. The report also underscores why non-escrow borrowers require monitoring that extends beyond the monthly mortgage payment.
The 5.2% national figure is not, by itself, evidence of a broad foreclosure wave. It remains below Cotality’s long-run average, and year-to-date readings can reflect seasonal payment patterns. But the speed of the recent increase is notable at a time when homeowners are also absorbing higher insurance premiums, maintenance costs and financing expenses.
For housing professionals, the more useful signal may be the divergence beneath the national number. The wide gap between states—and the persistence of those gaps—suggests that property-tax stress is highly local. Servicers, lenders and housing counselors may therefore see materially different borrower risk depending on geography, escrow status and the collection regime governing unpaid taxes.
