Foreclosure Auctions Climb in Q2 2026, FHA Loans Lead

Distressed property foreclosure auction activity continued its upward trend in the second quarter of 2026, with a notable surge driven by Federal Housing Administration (FHA)-insured mortgages and home loans originated during the post-COVID-19 housing boom, according to Auction.com's Auction Market Dispatch report released on Wednesday. Completed foreclosure auctions in Q2 2026 reached 66% of their first-quarter 2020 levels, marking a six-year high that was previously set in the first quarter of the same year. This represents a 23% increase year over year. Simultaneously, scheduled foreclosure auctions climbed to 71% of Q1 2020 levels, up 13% annually and also the highest point in over six years. This upward trajectory in scheduled auctions suggests a continued increase in completed foreclosure auction volume throughout the third quarter of 2026. Both scheduled and completed foreclosure auction volumes have now seen consecutive annual increases for six quarters, indicating a sustained pattern of growth in distressed property sales. Daren Blomquist, head of market economics at Auction.com, stated that the steady rise in foreclosure auction volume over the past eighteen months appears to be more of a reversion to the mean rather than the onset of a new widespread housing crisis, despite the significant percentage increases observed. However, Blomquist also highlighted specific areas of concern, noting that certain mortgage types and geographic locations are experiencing more pronounced increases in foreclosure auction numbers. These concerning pockets include mortgages originated in 2022 or later, particularly those insured by the FHA, and states such as Texas, Arizona, and Colorado, where foreclosure auction volumes have now surpassed pre-pandemic levels. The report further detailed that foreclosure auction activity was most pronounced among government-backed loans. Completed foreclosure auctions involving loans insured by the Department of Veterans Affairs (VA) reached 106% of first-quarter 2020 levels, an increase of 14% from the previous year. FHA loans saw completed foreclosure auctions at 95% of pre-pandemic levels, experiencing a substantial 47% year-over-year increase. In contrast, foreclosure auctions involving conventional loans, which are backed by Fannie Mae and Freddie Mac, were at 68% of Q1 2020 levels, showing a 27% annual increase. The data specifically points to loans originated in 2022 or later as a significant factor contributing to the rise in distressed sales.