Distressed housing inventory and demand moved higher in the first quarter, reflecting a "continued normalization" back closer to their pre-pandemic levels, according to a new report from Auction.com. 

Completed foreclosure auctions jumped 10% from the fourth quarter of 2025 and 33% from 12 months earlier. Meanwhile, scheduled property dispositions were also up by 11% and 16% compared to the same respective periods.

Completed volumes came within 66% of their first quarter 2020 level, with scheduled auctions at 69%, bringing foreclosure resolution activity toward historical norms.

"The quarter's supply metrics pointed to a healthier flow through the pipeline rather than a sharp shift in distressed trends," the report said. Trends demonstrated that "additional supply is likely" in coming quarters.

Similarly, the distressed sales rate, reflecting the quantity of properties buyers were willing to buy at auction as a percentage available for sale, inched up 2% between recent quarters for foreclosed properties. Activity fell 12%, though, below year-ago levels. The fluctuations reflected pricing adjustments by sellers, Auction.com reported.  

Auction buyers paid 67.6% of the estimated retail value in the first quarter, up from 66.8% in the final three months of 2025 but mostly on par with one year earlier. 

REO data shows differing trajectory

In real estate-owned activity, supply also grew, but by a more modest 6% on a quarterly basis and 26% year-over-year based on the number of bank auctions, the report said. The most recent number came in at 49% of its first quarter 2020 volume.

The REO sales rate jumped significantly compared to foreclosure events, increasing 12% from the fourth quarter and 36% over the same three months of 2025. 

REO buyers paid 67.3% of estimated retail value in the first quarter compared to 64.6% and 68.6% three months and one year prior.

Bank or lender property dispositions accounted for a 1.6% share of all home sales between January and March, according to another newly released report from real estate data provider Attom. The current percentage is up 1.3% in the previous period and 1.5% a year earlier.  

Regional variations appear in auction supply

Foreclosure auction supply also varied by region, with 45 states posting an increase in the number of homes offered for bid. Volumes doubled in some areas of the Southeast, with South Carolina seeing the biggest surge at 144% on a year-over-year basis.

On the opposite side, growth was more subdued in the Northeast, with New Jersey seeing its supply decrease by 15%, the largest margin drop in the U.S.

Auction data showed some weakness in the segment of properties secured by Department of Veterans Affairs and Federal Housing Administration-sponsored mortgages. Among homes brought for bid, supply increased across most loan types, but particularly for VA- and FHA-backed units, Auction.com said. 

The latest brought-to-auction number for VA-mortgaged properties show them now above the level of five years earlier. Units originally guaranteed by FHA as well as Fannie Mae and Freddie Mac remain below their early 2020 pace.