Falling foreclosure starts pulled overall foreclosure activity down 2 percent in August compared to July and 34 percent lower than one year earlier.  Filings were reported on 128,560 properties in August or one in every 1,019 U.S. housing units.  This was the 35^th consecutive month where foreclosure activity has decreased on an annual basis RealtyTrac said in its U.S. Foreclosure Market Report released this morning.

RealtyTrac tracks foreclosure filings nationwide in three categories, Defaults (Notices of Default (NOD) or Lis Pendens), Auctions (Notice of Trustee's Sale and Notice of Foreclosure Sale (NTS and NFS)); and Real Estate Owned (REO), properties that have been foreclosed on and repurchased by a bank)

Foreclosure starts dropped by 44 percent from levels in August 2012.  A total of 55,775 U.S. properties started the foreclosure process during the month, the lowest level since December 2005. Starts fell on an annual basis in 38 states and were down dramatically in both non-judicial states like Colorado (down 80 percent), Arizona and Washington (both down 65 percent), California (-57 percent), and Michigan (-55 percent), and judicial states such as Illinois and Massachusetts (-66 percent each), and Florida (-65 percent).

There were, however, month-over-month increases in 17 states, including Nevada (+226 percent), Ohio (+44 percent), and Maryland (+24 percent).  

REO increased six percent from July but was still down 25 percent from a year earlier.  This is the third time in four months REO activity has gone up and it has now reached a five month high.  Bank repossessions were up from July's numbers in 16 states and have increased from one year earlier in 23 states.  New York had an annual increase of 123 percent, returning to levels last seen almost three years ago.  New Jersey was up 63 percent to a 31 month high and Florida, Ohio, and Indiana all increased by over 40 percent from the previous year.

Nevada regained its number one position for overall foreclosure activity.  In addition to the 226 percent jump in foreclosure starts scheduled auctions increased 96 percent from July. Like many such anomalies the Nevada mega-increases stemmed from changes in foreclosure rules. There were 3,236 filings in the state, one for every 359 housing units.   Florida fell to second position with 23,372 filings or one in every 383 housing units, down 14 percent from July and 15 percent from a year earlier. They were followed by Ohio (one filing for every 537 housing units,) Maryland (one in 609), and Delaware (one in 638). 

"The foreclosure floodwaters have receded in most parts of the country, but lenders and communities continue to clean up the damage left behind, which means the recent uptick in bank repossessions is a trend that will likely continue into next year," said Daren Blomquist, vice president at RealtyTrac. "Meanwhile foreclosure flash floods will continue to hit some markets over the next few months as delayed foreclosure starts are quickly pushed into the pipeline. This was the case with the jump in Nevada foreclosure starts in August."