An emerging source of affordable housing supply

Foreclosure auction volume increased 23% in the second quarter of 2026 compared to a year ago, matching a six-year high from the previous quarter and the sixth consecutive quarter with an annual increase. 

Meanwhile, auction sellers — mostly mortgage servicers, banks and government agencies — lowered average pricing at foreclosure auctions by 3% from the previous quarter. Seller pricing was down 4% from a six-year high in the fourth quarter of 2025.

Higher volume + lower pricing = More demand at foreclosure auction

The combination of rising volume and lower pricing is boosting demand from the local community developers who regularly buy at auction. 

“The last few years we’ve been averaging about 18 to 20 properties,” said Michael Regan, a Dallas area real estate investor who primarily buys properties at foreclosure auction. “This year I’m probably tracking maybe about 24 to 30.”

According to the Q2 2026 Auction Market Dispatch published last week, more than 10,000 properties were brought to foreclosure auction in the second quarter of 2026 on the Auction.com platform — which accounts for about 40% of all foreclosure auctions nationwide — up 23% from a year ago. Nearly 5,000 of those properties were sold to third-party buyers like Regan, up 27% from a year ago. 

“Pricing is right,” said Regan, explaining why his foreclosure auction purchases are on track to be up this year. “It all comes back to what am I paying for and what can I sell it for.

“We are seeing where a number of the lenders (selling at foreclosure auction) are starting to discount, realizing that they’re sitting on an asset that’s not anywhere near what it was worth three, four years ago, or even two years ago,” Regan continued. “The banks are being smart enough to look at it and go, ‘Yeah, we have an issue here, let’s just discount it, move it.’ That’s the way it looks to me.”

The Auction.com data shows that what Regan is seeing in his local market is happening across the country, at least at an aggregate level. Pricing at auction is best measured by the ratio of the credit bid — the minimum amount the seller is willing or able to take to sell the property, also known as the reserve — to the estimated retail market value of the property. 

In the second quarter of 2026, the average credit bid-to-value ratio was 63.8% nationwide, down from 65.4% in the previous quarter and down from a six-year high of 66.7% in the fourth quarter of 2025. 

Much of the pricing shift was driven by mortgages insured by the Federal Housing Administration (FHA). The average credit bid-to-value ratio for properties secured by FHA-insured loans dropped more than 5 percentage points, from 67.8% in Q1 2026 to 62.2% in the second quarter. 

That lower pricing helped attract more demand from auction buyers like Regan. The average sales rate — percentage of properties brought to foreclosure auction that sell to third-party buyers — jumped 12% in the second quarter compared to the previous quarter and was up 3% from a year ago, according to the Auction.com data. The jump in sales rate for FHA-insured loans was even more dramatic, spiking 30% from the previous quarter and up 28% from a year ago.

More auction sales + local buyers = More affordable housing inventory

More auction purchases by local community developers like Regan mean more quality, affordable housing supply returning to the retail market in the second half of 2026 and into the first half of 2027.

“A lot of these homes we buy, they may be an eyesore to the neighborhood…some of these homes we’re buying have been sitting vacant for quite a while,” said Regan. “Our job is to clean it up and to put in a buyer that hopefully will appreciate the house and start to pay taxes on it.”

A public record analysis of properties Regan has purchased on Auction.com over the last six years shows he’s resold 56% of them. All of those resales are now owner-occupied.

And Regan is not an anomaly. An analysis of nearly 23,000 foreclosure auction sales in 2023 shows that 54% of those properties were resold within two years and that 78% of those resales are now owner-occupied. The average resale price of those properties was $311,045, 28% below the average overall retail market sales price of $433,323 between 2023 and 2025, according to an Auction.com analysis of public record data from Cotality. 

Given that it takes an average of about 8 months (238 days) to renovate and resell properties purchased at foreclosure auction — according to an Auction.com analysis of public record data from Cotality — many of the properties purchased at foreclosure auction in the second quarter of 2026 will be resold on the retail market in the second half of the year or in the first half of 2027.

When congratulated on his six foreclosure auction purchases in the March Super Tuesday foreclosure auctions in the Dallas area, Regan responded: “Thank you. I’ll let you know in three to six months.

“The price was right,” he continued. “There’s nothing that’s going to be a home run…but there are a lot of them that I would refer to as singles, maybe possibly one or two doubles. But they more or less will keep the money working at a better return than sitting in the bank, and we can keep everybody busy.”

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