The volume of mortgage execution auctions has risen by 19 percent to a two-year high, while buyer demand has dropped to its lowest level in years.
Auction.com, the leading real estate marketplace for distressed properties in the nation, announced its second-quarter 2025 auction market report today. The report reveals that the supply of distressed properties available at auction continued to grow in Q2 2025, hitting a two-year high, while auction demand dropped to multi-year lows. This shift in the market could have significant implications for the broader real estate sector. “Interest rates have killed the market,” wrote an Auction.com buyer based in Texas in response to a buyer survey conducted in the second week of July. “My waiting time of two years ago averaged 120 days. Now I have properties that are in more than two years in the market. “The housing market has collapsed,” the Texas-based buyer explained. “Homeowners are starting to cut prices to sell their properties and avoid foreclosure, which is causing a nightmare of lower appraisal values for investors.”” While still well below pre-pandemic levels, the steady rise in distressed volume over the last two quarters likely adds more downward pressure on home price appreciation, which is already burdened by the increasing inventory of homes for sale in the retail market. Auction buyers, often a good indicator of future retail trends, have shown a clear drop in demand over the past year, signaling potential weakness ahead in the retail real estate market. In the July survey, 38 percent of auction.com buyers stated that market conditions made them less willing to buy, showing no change from the previous quarter, but up from 34 percent in the third quarter of 2024. Supply growth encompassed most types of loans leading the mortgage execution auction, but Veterans Administration (VA) loans saw a dramatic surge, with an annual increase of 428 percent following the expiration of the mortgage execution moratorium in December 2024. The rise in mortgage execution auctions naturally extended to the market, driven by a third-party sales rate in such auctions. The auction volume was primarily influenced by vacant properties, which saw a 31 percent increase over a year, reaching a five-year high. “The rise in vacant properties available for auction is great news for the real estate market, as it indicates that sellers are clearing out more distressed homes, which can now meet the much-needed demand from auction buyers,” said Ali Haralson, president of Auction.com. “This is also positive for less experienced auction buyers, including owner-occupants, as these vacant properties are generally more accessible, allowing interior access and not requiring the new buyer to deal with any current occupants.” The upcoming mortgage execution auction data, along with a higher auction end rate, suggests a steady rise in auction volume in the coming months. This trend persists despite a declining demand for auction buyers in many markets across the country, especially in the Southeast and Sunbelt regions.
