Auction activity rose 19% year-over-year, according to the report, led by a 428% jump in foreclosure sales on VA-backed loans. The report cited the Federal government ending a VA foreclosure moratorium last December as the major reason for the spike.

VA foreclosure auctions still only made up 12% of the completed sales for the quarter, though this was a significant jump from last quarter when these loans were only 6% of the total. Loans sold to the government-sponsored enterprises made up 33% of all auctions, the largest share, while Federal Housing Administration-insured mortgages were 30%.

Meanwhile, private-label mortgages comprised 16% of all auctions and mortgages issued as part of the U.S. Department of Agriculture-guarantee program constituted the smallest amount at 7%.

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Foreclosure auction volume increased most in states throughout the South and West, with Nebraska having a 222% year-over-year increase and Arizona seeing a jump of 134%. Fifty-seven of the top 80 major markets the report looked at saw a rise in auction volume, with cities like Houston and Dallas experiencing increases of more than 100% from this point in 2024.

Despite more properties being available, though, many bidders are becoming hesitant to throw up their paddles. Foreclosure auction sales fell 4% from the first quarter and 12% from this time last year, reaching a 30-month low. The report pointed to hesitancy among bidders about uncertainty in a housing market where high supply and sluggish demand are starting to drag down housing prices. Year-over-year foreclosure sales dropped in markets across the country, the report found, but was most prominent in the South and West, regions that have also been most affected by softening home prices.

Buyers, it seems, may be waiting to see how much further prices will fall.

"Auction buyers as a group are a good barometer of future retail market trends," the report said, "and the clear pullback in demand from that group over the past year indicates future weakness in the retail housing market."

What does the future hold?

Meanwhile, new delinquency data suggests that this trend may continue on into the near future.

Delinquencies nationwide rose in June to 3.35%, according to new data from ICE Mortgage Technology. That rate is up 15 percentage points from May and is being driven largely by delinquencies in FHA-backed mortgages.

Although serious delinquencies, loans that are more than 90 days past due but not yet in foreclosure, were mostly flat, the report noted that FHA loans now account for more than 51% of all SDQs nationwide. Foreclosures are also ticking up across the country with a 10% rise year-over-year.

This comes as increasing numbers of homeowners find themselves underwater in their mortgages, especially in areas of the country where home prices have fallen from highs in 2022 and 2023. A confluence of factors, including softening demand, high interest rates, and the resumption of student loan debt collections, are all weighing on both buyers and sellers, adding more uncertainty to the housing market.