Short Sales Increase as Underwater Homeowners Seek to Avoid Foreclosure

Short sales in the U.S. are gradually increasing as underwater homeowners seek to avoid foreclosure, though they remain a small portion of the housing market. In 2025, approximately 30,000 short sales occurred nationwide, making up 0.6% of all closings and 28% of distressed sales, well below the peak levels seen in 2012. The rise in short sales is linked to market softening, increased inventory, and homeowners unable to move due to lack of equity and rising costs, especially in markets like Lakeland, Florida, and Pueblo, Colorado. These transactions are often viewed as less damaging to credit than foreclosures and can take several months to complete.

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