January marked the first time since Realtor.com began tracking in 2018 that short sales sold at a smaller discount than foreclosures, recovering about 9% more of a home's estimated value.
Short-sale discounts fell to about 20% by early 2026 after peaking near 50% in 2022, as the housing market cooled and the price-growth lag that had hurt these deals faded.
Foreclosures, by contrast, have sold in a steadier 25%-30% discount range, and Philadelphia Fed research on the 2007-2012 crash found short sales also outperformed comparable foreclosures by 9%-10%.
Short sales have risen in each of the past two years and spiked again at the start of 2026, but they still trail foreclosures by more than 2-to-1 because owners can remain in foreclosed homes without paying for 592 days on average.
Foreclosures are also climbing as FHA relief programs expired three quarters ago, suggesting distress is increasing even with home prices near record highs and the broader economy still strong.