Foreclosure auctions reached their highest level since the start of the pandemic in the third quarter of 2026, and the surge is being driven by a part of the market that had been quiet for years: FHA-insured loans. Auction.com’s Q3 2026 Auction Market Dispatch, released October 22, found completed foreclosure auctions up 25 percent from a year earlier — the seventh consecutive quarter of annual growth — while FHA auction volume jumped 73 percent and, for the first time in this cycle, passed its pre-pandemic level.
| Key figure | Q3 2026 | Change |
|---|---|---|
| Completed foreclosure auctions | Highest since Q1 2020 | Up 25% year over year; up 6% from Q2 |
| Scheduled foreclosure auctions | 71% of Q1 2020 level | Up 15% year over year — a post-pandemic high |
| FHA foreclosure auction volume | 117% of Q1 2020 level | Up 73% year over year; 43% of all auction volume |
| 2022-and-later mortgages, share of auction activity | 46% | Volume up 73% year over year |
| REO (bank-owned) auction volume | 51% of Q1 2020 level | Up 18% year over year; highest since Q3 2020 |
| California foreclosure auction volume | 6% of U.S. total | Up 80% year over year; 9% above Q1 2020 baseline |
| Foreclosure auction sales rate | 45.5% | Essentially flat year over year |
| Average price buyers paid | 65.3% of estimated retail value | Down from 66.8% in Q2; up from 64.5% a year ago |
FHA loans are driving the increase
The composition of the surge is the story. FHA-insured mortgages accounted for 43 percent of all foreclosure auction volume in the third quarter — the largest share since the first quarter of 2015 — and their volume reached the highest level since the first quarter of 2019. FHA borrowers, who typically buy with small down payments, have been under particular strain: ATTOM’s August 2026 foreclosure report counted 40,277 U.S. properties with a foreclosure filing, up 13 percent from a year earlier, and completed bank repossessions jumped 42 percent to 5,794.
Recent vintages dominate the pipeline as well. Mortgages originated in 2022 or later made up 46 percent of all completed foreclosure auctions in the third quarter, with volume on those loans up 73 percent from a year ago. By contrast, loans from the Great Recession era (2005–2009) fell 22 percent and now account for less than 9 percent of auction activity, and loans originated before 2015 collectively represent just 19 percent. The distressed market is no longer working through leftover crisis-era loans; it is processing borrowers who bought at higher prices and higher rates in the last few years.
The California angle: volume up 80 percent
California’s foreclosure auction volume rose 80 percent year over year in the third quarter — the second-largest increase of any state — and now sits 9 percent above its pre-pandemic baseline, accounting for 6 percent of the national total. ATTOM’s August data tells the same story at the filing stage: California recorded 2,565 foreclosure starts in August, third most of any state, and 589 completed bank repossessions, second only to Texas.
Demand is softer in the state’s big inland market, though. In the Riverside–San Bernardino metro, the foreclosure auction sales rate fell 34 percent from a year earlier, one of the steepest declines among the 64 major markets Auction.com tracks. Nationally, the sales rate eased to 45.5 percent, essentially flat year over year, and buyers paid an average of 65.3 percent of estimated retail value — down from 66.8 percent in the second quarter, consistent with seasonal softening rather than a collapse in demand.
What it means for homeowners at risk
If you have an FHA loan and are falling behind, you are squarely in the group this report describes — and FHA loans come with loss-mitigation options that other loans may not, including partial claims and FHA-specific forbearance and modification programs. The single most important step is to contact your servicer early, before the loan reaches the auction stage: once a sale is scheduled, options narrow quickly. A HUD-approved housing counselor (1-800-569-4287) can walk through the options for free. See our Avoid Foreclosure guide and The Foreclosure Process guide for the stages and deadlines that apply in your state.
What it means for buyers and investors
More auctions are coming, but the discounts are not widening dramatically yet. Buyers paid about 65 cents on the dollar of estimated retail value at foreclosure auctions, and 62.2 percent for bank-owned properties — better than a year ago for REO buyers, but still within the recent range.
Auction.com’s own pipeline points to more supply ahead: scheduled foreclosure auction volume for the fourth quarter is running ahead of last year — up 11 percent for October, 31 percent for November, and 15 percent for December. For anyone planning to bid, the mechanics matter as much as the price: most foreclosure auctions require cash on the day and offer no interior inspection. Start with our How Foreclosure Auctions Work guide and the Find Foreclosures listings page, and the Start Here guide if you are new to distressed property.
What to watch next
Three things will show whether this is a normalization or something worse: whether FHA auction volume keeps climbing past its pre-pandemic baseline, whether the fourth-quarter scheduled auctions convert into completed sales at the pace Auction.com expects, and whether buyer pricing holds near 65 percent of retail value as supply grows. ATTOM’s September monthly filing report and ICE’s October First Look will be the next checks. For now, the picture is a foreclosure auction market at its busiest since early 2020, driven by recent, government-backed loans — rising from a low base, but no longer a quiet corner of the housing market.
Sources: Auction.com Q3 2026 Auction Market Dispatch, Auction.com, released October 22, 2026; ATTOM U.S. Foreclosure Market Report, August 2026, ATTOM, released September 17, 2026. This article is general educational information, not legal, tax, or financial advice.