Auction volume continued a steady rise toward pre-pandemic levels in the first quarter this year, according to Auction.com, reflecting what the company said was the continued normalization rather than a new crisis in the distressed property market.
Foreclosure supply kept rebuilding, Auction.com said, with both completed and scheduled foreclosure auctions moving closer to Q1 2020 levels, while REO auction volume also continued its gradual recovery. The quarter’s supply metrics pointed to a healthier flow through the pipeline rather than a sharp shift in distressed trends, Auction.com noted.
Demand signals were firmer than they were late in 2025, but the improvement was selective,
Auction.com said that REO auction demand strengthened more clearly than foreclosure auction demand, and buyer price tolerance stabilized unevenly across local markets. Seller pricing adjusted gradually in response to those local conditions, helping to narrow bid-ask spreads on a quarter-over-quarter basis, the company noted.
Lower borrower equity remained part of the backdrop, Auction.com noted. Average equity for scheduled foreclosure auctions fell to 26.9% of value. That placed more upward pressure on roll rates from scheduled to completed auction, the company said.
According to Auction.com, buyer quantity demanded improved in Q1 at REO auction, likely because of lower seller pricing at REO auction compared to a year ago. The REO auction sales rate — the quantity of properties buyers were willing to buy as a percentage of properties available for sale — rose 12% from the fourth quarter of 2025 and 36% from a year ago.
Foreclosure Auction Pricing Fell
By contrast, Auction.com noted that the foreclosure auction sales rate increased 2% quarter-over-quarter but remained 12% below its year-ago level as seller pricing at foreclosure auction fell slightly from the previous quarter but was up from a year ago.
Relative to Q1 2020 norms, the two auction channels continued to follow different normalization paths, Auction.com said The REO auction sales rate ran at roughly 90% of its Q1 2020 level in Q1 2026, while the overall foreclosure auction sales rate stood at roughly 103% of its Q1 2020 level. Average bidders per REO auction increased to 2.7, up 8% from the fourth quarter of 2025, but down 14% from Q1 2025. That suggests better engagement than the previous quarter but less competitive pressure than a year earlier, Auction.com said.
Market-level demand remained uneven among Metropolitan Statistical Areas.
Twenty-six MSAs, or 27%, recorded higher foreclosure sales rates than a year ago, while 70 MSAs, or 72%, saw sales rates decline, Auction.com said. Among the highest-volume MSAs with improving sales rates, New York, Houston, Phoenix, St. Louis, and Cleveland posted year-over-year gains ranging from roughly 2% to 7%.
Auction.com noted that among the highest-volume MSAs with declining sales rates, Chicago, Atlanta, Dallas-Fort Worth and Detroit recorded year-over-year declines ranging from roughly 3% to more than 30%.
“Expecting more inventory in the second quarter of 2026,” Patrick, a Cleveland, Ohio, Auction.com buyer, wrote in response to a buyer sentiment survey in Q1 2026. “This is impacting how I am currently investing as more inventory will most likely lower overall prices.”
Buyer price demand — what buyers were willing to pay at auction — rose from the previous quarter at both REO and foreclosure auction in Q1 2026, Auction.com noted, although the year-over-year trend was more mixed. REO auction buyers were willing to pay an average of 67.3% of estimated retail market value, up from 64.6% in Q4 2025 but down from 68.6% a year ago.
That was 102% of the Q1 2020 level.
Retail Value
Foreclosure auction buyers were willing to pay an average of 67.6% of estimated retail market value in Q1 2026, up from 66.8% last quarter and essentially unchanged from a year ago, Auction.com said. That equated to roughly 94% of the Q1 2020 benchmark, indicating that foreclosure auction buyer price demand remained below its pre-pandemic reference point even as it improved sequentially.
At the market level, buyer price demand was almost evenly split between gains and declines. Forty-eight MSAs, or 49%, recorded higher buyer price demand than a year ago, while 49 MSAs, or 51%, saw price demand fall. Among the highest-volume MSAs with rising price demand, Chicago, New York, Houston, Detroit, and St. Louis recorded year-over-year increases ranging from roughly 1% to 6%. Among the highest-volume MSAs with declining price demand, Dallas-Fort Worth, Atlanta, Phoenix and several smaller markets saw declines generally in the low- to mid-single-digit range.
Distressed supply continued to rebuild in Q1 2026, Auction.com noted. Completed foreclosure auctions increased to 66% of their Q1 2020 level, up about 10% from Q4 2025 and 33% from a year ago, continuing the gradual normalization in foreclosure resolution activity, the company said. Scheduled foreclosure auctions rose to roughly 69% of their Q1 2020 level, up 11% quarter-over-quarter and 16% year-over-year. Auction.com said that indicates additional supply is likely to flow through the auction pipeline in coming quarters.
REO auction volume also rose, reaching 49% of its Q1 2020 level. That was up 6% from the previous quarter and 26% from Q1 2025, reflecting a modest but steady recovery in REO dispositions. The BTA rate fell to 26.2% in Q1 2026, down 1% from Q4 2025 but up 14% from a year ago, showing buyers continued to take a larger share of bids to title despite the sequential slowdown.
By loan type, Auction.com said that the BTA supply increased on both a quarterly and annual basis across most loan types, led by VA-insured and HUD loans, while private-label loans remained well below pre-pandemic levels. VA BTA volume in Q1 2026 exceeded 100% of its Q1 2020 level, while GSE and HUD loans remained below pre-pandemic norms but continued to recover.
48 States Reported Increase
By state, foreclosure supply growth remained broad-based, Auction.com said. Forty-five states reported an increase in BTA volume from a year ago in Q1 2026. Eighteen states saw BTA volumes above their Q1 2020 levels, indicating that foreclosure supply had fully normalized in a subset of lower-48 markets.
The company said that seller pricing adjusted gradually in Q1 2026, contributing to narrower bid-ask spreads on a quarter-over-quarter basis. At REO auction, the bid-ask spread narrowed to approximately 912 basis points, down from 1,074 basis points in Q4 2025 and 1,195 basis points a year ago. REO reserve-to-value averaged 76.4%, up 106 basis points quarter-over-quarter but down 419 basis points year-over-year, the company noted.
At foreclosure auction, the bid-ask spread narrowed to roughly 909 basis points, down from 980 basis points last quarter but still wider than 708 basis points a year ago. Credit bid-to-value averaged 67.0 percent, down 21 basis points from Q4 2025 but up 345 basis points from Q1 2025.
Those results suggest sellers were gradually adjusting pricing strategies in response to localized demand conditions rather than moving in a uniform direction, the company noted.
Sixty-two MSAs, or 64%, increased seller pricing from a year ago, while 35 MSAs, or 36%, reduced seller pricing, reflecting generally firmer lender pricing strategies, Auction.com said.
