Activity surged across all loan types except for those backed by the U.S. Department of Agriculture (USDA). Loans guaranteed by the U.S. Department of Veterans Affairs (VA) saw a significant increase, with auction volume more than doubling year over year following the expiration of a VA foreclosure moratorium at the end of 2024.
Despite an increase in foreclosure volume, demand from auction buyers showed signs of weakening amidst economic uncertainty. The foreclosure auction sales rate, which represents properties sold to third-party buyers, started the year strong but dropped sharply in February to a 26-month low before showing some recovery in March. Overall, the Q1 2025 sales rate declined compared to the previous year.
Real estate-owned (REO) auction activity, involving properties that have been reclaimed by lenders, also displayed mixed signals. While the number of bidders per asset slightly increased from the previous quarter, the sales rate decreased by 16% compared to the previous year.
Half of the major metro areas analyzed by Auction.com experienced year-over-year declines in foreclosure auction demand.
Major markets such as Houston, Chicago, Dallas, St. Louis, and Atlanta recorded double-digit declines, while cities like New York, Philadelphia, Detroit, Washington, D.C., and Minneapolis saw modest gains.
Buyer caution evident as price demand slips
Auction.com data indicates that price demand, representing the share of the after-repair value that buyers are willing to pay, remained flat in early 2025 compared to the previous quarter and decreased from the previous year.
Foreclosure auction price demand stayed steady at 56.7%, slightly up from 55.9% in Q4 2024 but down from 59% a year earlier. Monthly figures showed a consistent decline, with price demand dropping by 2% in January, 4% in February, and 6% in March. REO auctions followed a similar pattern, with initial gains in January tapering off into declines by March.
Of the 76 markets analyzed, 59% recorded annual drops in foreclosure auction price demand. Cities like Chicago, Houston, Philadelphia, and Dallas saw the sharpest decreases, while Minneapolis experienced a 57% surge in price demand annually.
State level recovery uneven
Foreclosure auction volume saw significant growth in states such as Arizona (up 151%), Utah (up 100%), New Hampshire (up 80%), Kansas (up 74%), and Texas (up 73%). Among larger states, trends varied, with Texas, Illinois, and Michigan showing annual increases, while New York and Ohio experienced declines.
Several states, including Connecticut, Colorado, Wyoming, and Minnesota, reported foreclosure auction volumes surpassing pre-pandemic levels.
REO supply also increased modestly, rising by 2% from the previous quarter and 3% from the previous year to reach a six-quarter high.
Buyer-seller disconnect
The gap between buyer offers and seller expectations remained stable for foreclosure auctions but narrowed for REO auctions.
For foreclosure auctions, the spread remained at 7 percentage points, more than double the 3-point spread from a year ago. Seller pricing increased by 100 basis points compared to the previous quarter, contributing to the wider gap. In REO auctions, the spread narrowed to 10 points, down from 12 points in Q4 2024, mainly due to stronger buyer bids.
According to recent data from ATTOM, a total of 93,953 properties had foreclosure filings from January through March, marking an 11% increase from the previous quarter.