Mortgage delinquencies eased in March, but higher-severity stress remained elevated, even as U.S. home prices posted their strongest monthly gain in nearly two years, according to Intercontinental Exchange (ICE)’s May 2026 Mortgage Monitor released Monday.

The national mortgage delinquency rate on first-lien mortgages fell to 3.35% in March, down 37 basis points (10%) from February. The decline aligned with typical seasonal patterns, which often see strong improvement as borrowers use tax refunds and seasonal cash inflows to catch up on payments.

ICE said March is historically the strongest month for seasonal improvement in mortgage performance.

Early-stage delinquencies (borrowers who are one or two payments behind) fell 12% during the month, while serious delinquencies (defined as 90 days or more past due) declined by 4%.

Despite the monthly improvement, the delinquency rate remains 14 bps higher than a year earlier, which the Mortgage Monitor attributed in part to lingering effects from last year’s hurricanes and wildfires. The March reading is still 56 bps below the average for that month during the early 2000s — and 63 bps below the level recorded at the onset of the COVID-19 pandemic.

Higher-severity stress, however, remains a concern. ICE said 154,000 more borrowers are now 90 or more days past due or in active foreclosure compared with the same period a year ago.

The increase was driven almost entirely by Federal Housing Administration (FHA) loans, which rose by 164,000 and now represent a record 55% of all seriously past-due mortgages nationwide. Delinquency volumes declined in conventional, whole loan and privately securitized mortgages, while those for U.S. Department of Veterans Affairs (VA) loans rose 2%.

Overall, 1.6% of active mortgages are now seriously past due, up 26 bps, or 20%, from a year earlier. That rate remains slightly above levels in the early 2000s but are about 7% below March averages from 2018 to 2020.

ICE said seasonal trends typically continue to ease serious delinquencies through May, which could help reduce near-term volumes.

The credit data comes alongside broader housing market strength, with ICE reporting U.S. home price growth of 0.32% in April on a seasonally adjusted basis. That’s the strongest monthly gain in nearly two years, equivalent to a 3.9% annualized rate. Annual home price growth also ticked up to 0.9%.

“Home price growth accelerated in April as softer interest rates raised the ceiling on borrower affordability,” said Andy Walden, ICE’s head of mortgage and housing market research. “While a 0.32% monthly increase may not sound like much, when annualized, it’s equivalent to home prices appreciating at nearly 4% if sustained over a 12-month period.”

Walden said the key question as the spring home purchase season marches along is whether that momentum can hold as interest rates trend higher.

Home price gains were widespread, with 90% of U.S. markets posting increases in April, and 70 of the 100 largest markets recording year-over-year gains. The Northeast led the way on a regional basis, while all 30 markets with annual declines were in the South and West.

First-time buyers accounted for more than half of purchase loans closed in March, the highest share since 2020, while refinance activity surged to $242 billion in the first quarter, the strongest figure since early 2022.

Refinances represented 44% of all originations, the largest share in four years. Rate-and-term refinances made up 60% of refi activity, with borrowers lowering their monthly payments by an average of $257 after a 97-bps rate reduction.

The report also found that mortgage processing times continued to improve. The average purchase loan closed in 36.8 days in March, the fastest pace on record since tracking began in 2019.

“The recent mortgage trends highlight the importance of giving lenders and servicers the tools to respond quickly to changing borrower needs and market conditions,” said Bob Hart, president of ICE Mortgage Technology.

“From helping first-time buyers navigate financing to supporting refinance opportunities and proactively managing portfolio risk, timely data and integrated technology are critical.”