U.S. homes are entering the foreclosure process at a slower pace than a year ago, and fewer properties are being repossessed by lenders, new data show.
Between January and October, 971,533 homes were placed on the path to foreclosure, down 8 percent from the same period last year, foreclosure listing firm RealtyTrac Inc. said Thursday.
At the other end of the foreclosure process, banks repossessed 559,063 homes through the end of last month, a decline of nearly 19 percent from a year earlier.
That puts lenders on pace to complete 650,000 foreclosures this year, down from 800,000 in 2011, the firm said.
While many states continued to see heightened foreclosure activity last month, the decline at a national level reflects several factors working to stem, or in some cases, merely delay foreclosures.
Home sales are running ahead of last year, lifting home prices in many parts of the country, which can make it easier for homeowners to lower their monthly payments by refinancing.
"Those improving housing conditions are lifting all boats and lifting some people out of foreclosure," said Daren Blomquist, a vice president at RealtyTrac.
However, Superstorm Sandy drove a large increase in foreclosures late in the month. RealtyTrac said foreclosures in New York and New Jersey more than doubled compared to a year ago, and in Connecticut, activity grew 41 percent. Those were the three largest increases in the U.S.
Foreclosure activity rose 92 percent in the 34 counties in those states that were hardest-hit by the storm. Even with that increase, foreclosures in those areas were less than half the national average.
Nationally, stronger job growth likely has helped some homeowners avoid foreclosure. Still, the country's unemployment rate remains just below 8 percent.
The percentage of mortgage-holding homeowners who were at least two months behind on their payments sank in the third quarter to the lowest level in more than three years, according to credit reporting firm TransUnion.
Efforts by federal and state lawmakers to slow down the foreclosure process or make loan modification a more likely option for homeowners also are having an impact.
Lenders also appear to be more amenable to short sales, when the bank agrees to accept less than what the homeowner owes on their mortgage, as a way to avoid foreclosing upon a borrower.
In February, the mortgage industry agreed to pay $25 billion to settle allegations that many banks and mortgage servicers processed foreclosures without verifying documents.
Another instrumental factor in the sharp slowdown in foreclosure activity: The pipeline of risky home loans made before 2008 is shrinking. Loans issued since then, after banks tightened lending standards, are less likely to go unpaid.
"We're past the bulk of the high-risk loans that were most susceptible to foreclosure," Blomquist said.
Even so, there are signs at the state level that more homes could end up in foreclosure in coming months.
The trend is most evident in states such as New York, Florida and New Jersey. In those states, the courts play a role in the foreclosure process, prolonging the time it's taking lenders to tackle their backlog of foreclosure cases.
Fourteen states saw an annual increase in foreclosure activity, which RealtyTrac measures as the number of homes receiving a default notice, scheduled for auction or repossessed by the bank.
Of those, only two — North Carolina and Washington State — are not states where the courts are involved in foreclosures.
Foreclosure moratoriums in New York, New Jersey and Connecticut in the aftermath of Sandy last month means it will take longer for lenders complete pending foreclosures, Blomquist said.
All told, 89,209 homes entered the foreclosure process in October, up 2 percent from September, but down 19 percent from October last year, RealtyTrac said.
Lenders repossessed 53,478 homes last month, a drop of less than 1 percent from the previous month, down 21 percent from October 2011. Home repossessions have declined on a monthly basis the past 24 months.