Completed foreclosure auctions surged 25% year over year in the third quarter, driven by significant increases in properties backed by post-2022 originations and Federal Housing Administration-guaranteed loans, according to a report by Auction.com.
FHA Foreclosure Auction Volume Hits Highest Level Since 2019
- FHA foreclosure-auction volume rose 73% year over year in the third quarter, reaching its highest level since early 2019.
- Foreclosure auctions for homes purchased since 2022 jumped 73%, accounting for 46% of total volume.
- Total auction volume grew across 31 states, with the steepest increases recorded in Arkansas, California, Texas, and Florida.
FHA Loans and Post-2022 Vintages Drive Third-Quarter Surges
The latest data from Auction.com shows that properties backed by Federal Housing Administration-guaranteed loans accounted for 43% of total foreclosure inventory during the third quarter. This represents the largest share for FHA-backed inventory since 2015. Meanwhile, properties backed by conventional loans guaranteed by Fannie Mae and Freddie Mac made up 33% of the inventory, marking a 30% year-over-year increase.
Borrowers who purchased homes after 2022 are facing intense financial strain from current interest rate levels. Expectations for broader macroeconomic easing and future refinancing opportunities have failed to materialize for these recent vintages. Compounding the pressure, the termination of specific loss-mitigation measures for government-backed mortgages this year coincided with the sharp upward trend in FHA foreclosure volumes.
Regional Spikes in Arkansas, California, and Texas
Higher auction volumes spread across 31 states during the period, led heavily by the nation’s most populated regions. Foreclosure volume accelerated 80% in California, 54% in Texas, and 67% in Florida. Arkansas led the country with a 113% surge in auction volume, followed by California, then Nevada and South Carolina at 76%, and Washington State at 69%.
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Despite the rising volume of scheduled auctions, overall sales rates failed to match the inventory growth. The sales rate across all foreclosure auctions declined five percentage points to 45.5%, while quarter-over-quarter sales remained essentially flat with a minor 0.4% increase. Conversely, FHA-specific sales rose 19% compared to the third quarter of 2025, supported by a 3% decrease in home prices.
REO Auction Demand Grows as Prices Dip
Properties reaching the real estate-owned (REO) auction stage climbed 18% from the previous year, marking the seventh consecutive quarter of volume growth. Demand for REO properties strengthened as pricing adjusted downward. The sales rate for REO units jumped 29% year over year alongside a 3% price dip.
Buyers of bank-owned units paid an average of 62.2% of estimated retail value in the third quarter, down from 64% in the same period of 2025. Daren Blomquist, head of market economics at Auction.com, noted that scheduled foreclosure auction volume points to continued inventory expansion as the year closes. “Scheduled foreclosure auction volume for the fourth quarter indicates both foreclosure auction volume and REO auction volume will continue to increase in that quarter,” Blomquist wrote.
| Metric | Q3 Year-Over-Year Change | Recent Share / Value |
|---|---|---|
| Completed Foreclosure Auctions | Up 25% | N/A |
| FHA Foreclosure-Auction Volume | Up 73% | 43% of total inventory |
| Post-2022 Vintage Auctions | Up 73% | 46% of total volume |
| Fannie/Freddie Inventory Share | Up 30% | 33% of total inventory |
| REO Average Sale Price | Down 3% | 62.2% of estimated retail value |
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
