Auction.com’s 2026 Outlook Reveals Bearish Home Price Expectations

Even though homebuying conditions have improved, the real estate investors closest to distressed housing are increasingly pessimistic about where home prices are headed next. That’s according to Auction.com‘s 2026 Buyer Outlook Report that was released Wednesday.

The report is based on a survey of more than 400 Auction.com buyers in the first quarter of 2026. It revealed that local community developers, who are the primary buyers at distressed property auctions, are more bearish on home prices and rents for 2026 than at any point in the past five years. This comes even as they report the best affordability in years across many local markets.

The report also found that 43% of investors who buy distressed properties at auction expect home prices in their local markets to decline this year. That is the highest share since Auction.com began the survey in 2022.

A record 31% of respondents also expect rents to fall in 2026, signaling that investors in the distressed segment anticipate continued pressure on both sides of the housing ledger.

While 59% of buyers still plan to increase their purchases this year, that is the lowest share since 2023, when 54% expected to buy more, according to the announcement.

“Local community developers buying at auction expect a slow-motion housing correction to continue in 2026,” Jason Allnutt, CEO of Auction.com, said in a statement. “The silver lining is they are also reporting improved affordability in an increasing number of local markets.”

Affordability improves, but buyers still see more downside

Despite the bearish outlook, only 36% of surveyed buyers described their local markets as overvalued heading into 2026, a record low for the report. That suggests more markets are now pricing in recent corrections and are the most affordable they have been in five years for these investors.

Even so, many buyers foresee additional softening this year, indicating they believe “the market has more to give back” on prices before reaching a durable floor. That dynamic could influence credit risk assumptions, loss severity expectations and bidding strategies for distressed assets.

Expectations for price declines are not evenly distributed across the country. The Central region was the most pessimistic, with 50% of buyers expecting prices to fall in 2026. By contrast, the Northeast was the least bearish, with 37% expecting price decreases.

Across all regions, 40% of buyers expect a modest price increase of up to 5% in 2026, while just 17% expect prices to rise more than 5%. That share is down from 20% in 2025 and is the lowest level since the survey launched in 2022.

For mortgage originators and servicers, this split outlook — modest national increases but regional downside risk in the Central, Southeast and West — underscores the importance of localized valuation, collateral and disposition strategies, especially for nonperforming and real estate-owned (REO) portfolios.

Investors also expect rent growth to cool, with some regions bracing for outright declines. Southeast buyers were most likely to expect decreasing rents (42%), followed by those in the West (38%). Central (28%) and Northeast (27%) buyers were closely aligned in terms of expectations for falling rents.

Overall, 58% of buyers anticipate modest rent increases of 1% to 5% in 2026, while only 11% expect rents to rise more than 5% — a record low for the survey.

These expectations point to a more constrained revenue environment for single-family rental operators and fix-and-flip investors, particularly in high-supply or high-foreclosure pockets of the Southeast and West. Underwriting that assumes double-digit rent growth in these markets will likely face more scrutiny.

Despite increased caution on prices and rents, most distressed buyers still plan to grow their portfolios this year, with strong regional differences. Nearly three-quarters of buyers in the Southeast (73%) expect to increase their property purchases in 2026, the highest share of any region.

In the West, 58% expect to buy more, followed by 57% in the Northeast and 55% in the Central region.

Several Southeast states are also seeing sharp increases in foreclosure auction volume, which is expanding the pool of distressed inventory. According to Auction.com’s Q4 2025 Auction Market Dispatch, foreclosure auction volume rose sharply in Florida (up 176% year over year), South Carolina (up 153%) and Georgia (up 140%).

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication. The system helps convert company announcements and industry data into HousingWire-style news coverage.