Foreclosures drop sharply in July as housing market recovers

Foreclosures plummeted in July, a positive sign for the housing market and broader economic recovery, a new report showed Wednesday. 

In the past year, the foreclosure rate dropped 21.2 percent, falling to 45,000 last month, the 18th straight month of at least 20 percent year-over-year decline, according to housing market tracking firm CoreLogic.

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From June, completed foreclosures were down 8.5 percent from the 49,000 reported in June.

"The stock of distressed debt continues to rapidly decline, especially in Western states," said Sam Khater, deputy chief economist at CoreLogic.

"The number of seriously delinquent loans fell by more than 25 percent from the prior year in 10 states and seven of those states were in the West."

As a comparison, before the housing market's 2007 crash, completed foreclosures averaged 21,000 a month nationwide between 2000 and 2006.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure.

Since the financial crisis began nearly six years ago, there have been about 5.1 million completed foreclosures.

As of July, approximately 640,000 homes in the United States were in some stage of foreclosure, compared with 976,000 in July 2013, a year-over-year decrease of 34.4 percent.

The foreclosure inventory as of July made up 1.6 percent of all homes with a mortgage, compared with 2.4 percent in July 2013.

Foreclosures have made 33 months of consecutive year-over-year declines.

"Based on current trends, the overall foreclosure inventory could trend down to as low as 500,000 homes by year-end which is very positive news for the housing market," said Anand Nallathambi, president and CEO of CoreLogic. 

"In total, there are now 36 states with an inventory of foreclosed homes lower than the national rate of 1.7 percent."

Other highlights in the July report:  

• All but two states posted double-digit declines in foreclosures in the past year. 

• All told, 31 states show declines in year-over-year foreclosure inventory of greater than 30 percent, with Arizona and Utah each posting 49 percent drops.

• The five states with the highest number of completed foreclosures for the 12 months ending in July were: Florida (120,000), Michigan (44,000), Texas (38,000), California (32,000) and Georgia (31,000). These five states account for almost half of all completed foreclosures.

• The four states and the District of Columbia with the lowest number of completed foreclosures for the 12 months ending in July were: South Dakota (73), the District of Columbia (110), North Dakota (307), West Virginia (498) and Wyoming (677).

• The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: New Jersey (5.7 percent), Florida (4.8 percent), New York (4.3 percent), Hawaii (3.0 percent) and Maine (2.7 percent).

• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Nebraska (0.4 percent), Alaska (0.4 percent), Arizona (0.5 percent), Minnesota (0.5 percent) and North Dakota (0.5 percent).