With more auction volume to (finally) choose from, why are some buyers hitting the brakes?
The volume of foreclosure auctions scheduled for the third and fourth quarters of 2025 points to more opportunities for investors and other buyers to acquire distressed properties at auction in the second half of the year, continuing a trend from the first half of the year (see Fig. 1).
This trend also points to more financing opportunities for private lenders and others who offer commercial loans to local community developers who buy and renovate distressed properties, either for resale or rental.
More acquisitions expected at auction
“There is definitely more inventory,” one Florida-based Auction.com buyer wrote in response to a buyer survey in early July. “(The) market had stabilized. I expected it to fall further, but apparently that’s not the case.”
This buyer, who also buys property in Oklahoma, said she plans to buy more distressed properties at auction in the next three months than in the previous three months. That matched 37% of respondents, up from 33% of respondents in an April survey.
Volume creation for H2
Auction.com’s proprietary scheduled foreclosure auction data, which represents nearly 50% of all foreclosure auctions nationwide, shows an increase in volume in the second half of 2025 compared to the same time in 2024.
As of early June 2025, more than 22,000 properties were already scheduled for foreclosure auction for the third quarter of 2025. This represented a 21% increase from the third quarter of 2024 as of early June 2024.
Although data is still scarce, auction data scheduled for October indicates that annual increases in foreclosure auction volume could continue to accelerate in the fourth quarter. As of early June 2025, the number of properties scheduled for auction in October 2025 increased by 25% compared to the same scenario a year ago.
A maximum of two years in the second quarter
Projected increases in foreclosure auction volume for the second half of 2025 would continue a trend already observed in the first half of the year. The volume of foreclosure auctions completed in the second quarter of 2025 increased 8% from the previous quarter and 19% from the previous year to a two-year high, according to the latest Auction Market Dispatch from Auction.com.
The largest increase in foreclosure auction volume for the second quarter of 2025 was for properties securing Veterans Affairs (VA)-insured mortgages, which increased a staggering 122% from the previous quarter and 428% from the previous year. Those stratospheric increases were somewhat expected given the national moratorium on VA-insured foreclosures that ended in December 2024. That moratorium created a backlog of deferred problems that are now making their way. until the foreclosure auction. VA numbers should normalize in the coming quarters as the backlog is resolved. Additionally, a new partial claims loss mitigation option is now available for VA borrowers thanks to a bill passed by Congress and signed into law by President Donald Trump on July 30.
Aside from that VA outlier, foreclosure auction volume in the second quarter remained higher than a year ago across all other loan types except loans insured by the U.S. Department of Agriculture (USDA) (see Fig. 2). Completed foreclosure auctions on those USDA-guaranteed loans decreased 2% from a year ago, while completed foreclosure auctions increased 14% for loans backed by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and increased 8% for loans insured by the Federal Housing Administration (FHA). Completed foreclosure auctions on private loans increased 5%.
Foreclosure Auction Trends by State
The volume of foreclosure auctions completed in the second quarter of 2025 increased from a year ago in 32 states and the District of Columbia (see Fig. 3). The states with the largest increases were Nebraska (up 222%), Arizona (up 134%), Vermont (up 100%), Texas (up 83%), and Hawaii (up 81%).
The rapid increase in distressed auction inventory in some markets is causing some buyers to be more cautious in their acquisition strategy. In the July survey, 38% of Auction.com buyers surveyed said the current market environment is making them less willing to buy in auction, slightly higher than the previous quarter and higher than the 34% of a year ago.
“Tariffs keep interest rates and material costs high, and contractors remain busy,” wrote one Vermont respondent. “I anticipate this will have a negative impact on the economy. I also anticipate a slowdown in the third quarter… and I don’t want to have too much unfinished business… I’m still holding on to reserves because I don’t want to miss out on a good deal.”
Despite impressive percentage increases in many states, the volume of foreclosure auctions completed in the second quarter of 2025 remained below pre-pandemic levels (first quarter of 2020) in all but eight states and the District of Columbia. Those states were Connecticut, Colorado, Louisiana, Iowa, Minnesota, Oklahoma, Kansas and Hawaii.
Trends in Foreclosure Auctions by the Metro
As shown in Figure 4, at the metropolitan level, foreclosure auction volume in the second quarter of 2025 remained below pre-pandemic levels in 62 of the top 80 markets (78%). Exceptions where second-quarter foreclosure auction volume met or exceeded pre-pandemic levels included Houston, Minneapolis-St. Paul, New Orleans, Baton Rouge, Indianapolis and Denver.
Foreclosure auction volume in the second quarter of 2025 increased year-over-year in 57 of the top 80 markets (71%), including Houston (up 140%), Dallas (up 100%), Detroit (up 46%), Atlanta (up 58%), and Phoenix (up 215%).
Raising the bank-owned ship
The rising wave of foreclosure auctions also helped increase the volume of bank-owned property (REO) auctions in the second quarter of 2025. Properties revert to the bank or foreclosing lender as REO if they are not sold to third-party buyers at the foreclosure auction.
REO auctions in the second quarter of 2025 increased 10% from the previous quarter and increased 20% from the previous year to a more than two-year high.
Vacant real estate auctions increased at an even faster pace, up 31% from a year ago, reaching a five-year high (see Fig. 5).
Vacant real estate auctions tend to be more attractive to a broader spectrum of distressed property buyers, including those using private loans or other types of financing to purchase. Because the property is vacant, there is a greater chance of obtaining an interior inspection, or at least an interior appraisal from the bank selling the property, to help more accurately assess the true “as-is” value.
“Especially interested in vacant properties rather than occupied,” one Missouri-based Auction.com buyer wrote in response to the July survey. That respondent said market conditions have not affected his willingness to buy at auction and that he is eager to see more inventory available at auction. “There are not enough properties to bid on.”
That buyer may get his wish if the rising foreclosure volume trends from the first half of 2025 continue into the second half of the year, as the data indicates will happen.
