The third quarter of 2026 saw a 25% year-over-year surge in completed foreclosure auctions, marking the highest quarterly count since Q1 2020, as reported by Auction.com in its Q3 2026 Auction Market Dispatch.
FHA-insured loans were the primary driver of this growth, with their foreclosure auction volume climbing 73% compared to the previous year.
For the first time since the pandemic began, this rise surpassed its pre-pandemic benchmark, hitting 117% of Q1 2020 figures—the peak since Q1 2019.
FHA-insured mortgages comprised 43% of all foreclosure auction activity, the highest proportion recorded since Q1 2015.
Foreclosure Auction Trends
Mortgages issued in 2022 or later made up 46% of third-quarter auction activity, reflecting the movement of post-pandemic originations through the default pipeline, with their volume rising 73% year over year.
Real estate-owned (REO) auction activity increased 18% from the previous year, marking the seventh straight quarterly rise and reaching levels not seen since Q3 2020, or 51% of pre-pandemic benchmarks.
Sales proceeds averaged 65.3% of estimated retail market value in Q3 2026, down from 66.8% in Q2 but up from 64.5% in Q3 2025.
Market Outlook
Forecasts for Q4 2026 show scheduled foreclosure auction volume rising 11% in October, 31% in November, and 15% in December, signaling continued growth in both foreclosure and REO sales.
FHA-insured property demand surged as pricing adjusted downward, with their sales rate climbing 19% year over year.
All REO auction sales rates increased 29% from Q3 2025, driven by a 3% price reduction during the period.
Among 64 tracked markets, half saw year-over-year sales rate gains, with Sun Belt and Midwest regions outperforming others, while the Great Lakes corridor and high-cost coastal areas lagged.
State-Level Trends
Thirty-one states posted year-over-year gains in foreclosure auction volume, led by California (80% up), Florida (67% up), and Texas (54% up), alongside Ohio (12% up) and Illinois (7% up).
Arkansas (113% up), California (80% up), South Carolina (76% up), Nevada (76% up), and Washington (69% up) recorded the sharpest increases.
Eighteen states surpassed their Q1 2020 baseline, including Texas (38% above), California (9% above), Arizona (31% above), Louisiana (41% above), and Colorado (246% above).
Texas dominated national foreclosure auction volume at 15%, followed by Florida (8%), California (6%), Ohio (5%), and Illinois (5%).
Seller pricing in Q3 2026 averaged 64.2% of estimated market value, a decline from 65.1% in Q2 and stable versus the prior year.
The lowest prices appeared for USDA-insured loans at 55.9%, followed by GSE-backed loans at 62.1% and FHA-insured loans at 62.6%.
Veterans Affairs-insured loans commanded the highest prices at 76.3%, with privately held loans at 66.8%.
REO reserve pricing dropped to 74.9% of market value, down from 75.6% in Q2 and 77.1% in Q3 2025, signaling ongoing market adjustment.
Great Recession-era loans (2005-2009) fell 22% year over year, now representing under 9% of activity, while pre-2015 originations account for 19% of volume.
Fannie Mae and Freddie Mac saw a 30% year-over-year increase in foreclosure auction volume, contributing to the broader market recovery.
