U.S. foreclosure auction activity climbed sharply at the end of 2025, reaching its highest level since the second quarter of 2020. The increase marks a significant shift from the unusually mellow foreclosure environment that followed the onset of the pandemic, when federal and state moratoriums, widespread forbearance programs and stimulus measures suppressed distressed property activity across the housing market.
According to fourth-quarter data compiled by real estate analytics firm ATTOM,foreclosure auction volume rose roughly 48% year over year in Q4 2025. While activity remains well below levels recorded before the pandemic, the latest figures underscore a steady normalization of the foreclosure pipeline as pandemic-era protections fully unwind.
Still below pre-pandemic norms
Despite the notable jump, foreclosure auctions have not returned to their historical peak. Q4 2025 volumes remain approximately 39% lower than those seen in the first quarter of 2020, just before COVID-19 disruptions dramatically altered housing and mortgage markets.
This gap reflects the lasting effects of tighter underwriting standards adopted after the Global Financial Crisis, as well as the significant home equity gains accumulated by homeowners during the post-pandemic price boom.
High levels of equity have allowed many distressed borrowers to sell their homes before reaching foreclosure, therefore limiting the scale of auction growth even as delinquencies tick higher. Analysts view the current rise less as a warning sign, and more as a delayed release of distressed inventory that was temporarily frozen by emergency policies.
Geographic growth concentrated in key states
The increase in foreclosure auction activity has not been evenly distributed across the country. Data shows growth in 43 states, with particularly sharp increases in large and fast-growing markets.
Florida recorded one of the steepest year-over-year jumps, followed by Georgia, Texas, Illinois and Ohio. These states combine high population growth with significant investor ownership, making them more sensitive to interest rate changes and affordability pressures.
Sun Belt markets, which experienced rapid price appreciation during the pandemic housing boom, are now seeing more borrowers struggle to adjust to higher mortgage rates, property taxes and insurance costs. At the same time, judicial foreclosure states continue to work through longer backlogs, contributing to uneven regional patterns.
Loan types drive the surge
Loan composition has also played a critical role in the rise of foreclosure auctions. Properties backed by Veterans Affairs loans saw especially large increases after the expiration of a foreclosure moratorium that had remained in place longer than those for other loan types. As a result, VA-backed homes entered the foreclosure process in higher numbers during the second half of 2025.
Conventional and FHA loans also posted increases, though at more moderate rates. The trend reflects the broader impact of elevated borrowing costs, which have made it harder for some homeowners to refinance or sell, particularly those who purchased or refinanced near the peak of home prices.
Auction sales lag despite rising volume
While more homes are reaching the auction stage, a smaller share is actually selling at foreclosure auctions. Rising interest rates, higher financing costs for investors and increased uncertainty around home values have reduced bidder participation. As a result, auction sale rates declined to multi-quarter lows, even as average winning bids edged slightly higher.
Many properties that fail to sell at foreclosure auctions are moving into real estate–owned inventory, where lenders take possession and later resell the homes. REO auction sales improved in late 2025, partially offsetting the slowdown in foreclosure auction transactions and helping lenders manage growing distressed inventories.
A sign of market normalization, not crisis
Housing analysts largely interpret the surge in foreclosure auctions as a return to more typical market conditions rather than the beginning of a housing downturn. After years of historically low foreclosure activity, the system is gradually recalibrating to reflect higher interest rates and the end of pandemic relief programs.
Even with the recent increase, foreclosure levels remain far below those seen during the Great Recession, and widespread negative equity is not present in most markets. For policymakers, lenders and investors, the data suggests a housing market adjusting to new economic realities rather than entering a period of systemic stress.
As 2026 unfolds, foreclosure auction volumes are expected to remain elevated compared to recent years but constrained by strong homeowner equity and cautious lending practices.
