Encouraging trends in the U.S. economy continue to support the upward progression of the housing sector. Despite fears of an imminent stall, the third quarter of 2013 witnessed the fewest homes in seven years enter the foreclosure process. Accordingly, the downturn in foreclosure rates may be attributed to fewer homeowners falling behind on their payments and a gradually improving housing market.
According to RealtyTrac, 174,366 homes were the subject of foreclosure action between July and September. With that being said, this number reflects the lowest level of foreclosure starts since the second quarter of 2006. Furthermore, the previous quarter was the beneficiary of a 13 % decrease. Perhaps even more encouraging, however, is the 39% decrease seen between last quarter and the year before.
On a national level, foreclosure starts decreased at the same time the U.S. housing market began experiencing significant signs of recovery. Those signs include, but are not limited to: the recovery from a deep slump, a rebound driven by rising home prices, steady job growth and fewer troubled loans. The culmination of these factors may continue to decrease the amount of homes that are subjected to the foreclosure process.
“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.”
On a national level, individual states continued to express their own propensity for the foreclosure crisis. While a total of 38 states saw their rates drop in the last year, 11 saw an increase. Maryland, New Jersey, Oregon, and Connecticut were among those that jumped.
It is important to note that, while fewer homes entered the foreclosure process, more were actually lost in the last quarter. That is to say, the banks were actually able to collect on those houses that have completed the foreclosure process. With fewer homes entering foreclosure starts, lenders were able to collect their assets. Completed foreclosures rose 7% in the third quarter versus the April-June period. Completed foreclosures were down 24% from the third quarter last year, however.
In all, lenders repossessed a total of 119,485 homes between July and September. With the addition of this number to the number of houses that have already been repossessed, banks are on track to complete foreclosures on 507,497 homes. While this may seem high, it is down approximately 24% for the 2012 total. By comparison, foreclosures were at their highest in 2010 when they peaked at 1.05 million.