The number of U.S. homes set on the path to foreclosure slid to a seven-year low in the third quarter, reflecting a gradually improving housing market and fewer homeowners falling behind on mortgage payments.
Lenders initiated foreclosure action on 174,366 homes in the July-September period, the lowest level since the second quarter of 2006, foreclosure listing firm RealtyTrac said Thursday.
Foreclosure starts declined 13 percent from the previous quarter and were down 39 percent from the third quarter last year, the firm said.
“It’s looking really good that there are not more coming into the pipeline,” said Daren Blomquist, a vice president at RealtyTrac. “Barring any other economic shock to the system, we expect that to bode well going forward.”
Foreclosure starts fell on an annual basis in the third quarter in 38 states, including Colorado, Arizona, California, and Illinois. They increased from a year earlier in 11 states, including Maryland, Oregon, New Jersey, and Connecticut.
While fewer homes are entering the foreclosure process, lenders stepped up home repossessions, which led to a quarterly increase in homes lost to foreclosure.
Completed foreclosures rose 7 percent in the third quarter versus the April-June period, the firm said. Completed foreclosures were down 24 percent from the third quarter last year, however.
All told, 119,485 homes were taken back by lenders in the July-September quarter. That puts the nation on pace to end this year with roughly 507,497 completed foreclosures, or down about 24 percent from 2012’s total.
Foreclosures peaked in 2010 at 1.05 million and have been declining ever since.
The number of homes taken back by banks in the third quarter climbed from the previous quarter in 26 states, including New York, New Jersey, Illinois and Virginia, RealtyTrac said.