Rising home prices and the lowest foreclosure rates in 7 ½ years are the latest signs the U.S. is shaking off its housing bust hangover.
Fewer U.S. homes entered the foreclosure or repossession process in June, foreclosure listing firm Realty Trac Inc. said Thursday. Meanwhile, the median price of a homes purchased in the U.S. rose 2.3 percent to $110,000, according to the latest 2011 American Housing Survey.
The median home price in 2009 was $107,500. Lenders initiated the foreclosure process on 57,286 homes last month, the lowest monthly level since early 2006. Foreclosure starts are on pace to reach roughly 800,000 this year, down from 1.1 million last year, the firm said.
Completed foreclosures, when the lender repossesses a home, are on track to hit a half-million, or about a quarter below last year's total.
The trend comes as the U.S. housing recovery continues to gain strength, propelled by steady job gains, low interest rates, improving consumer confidence and growing demand for homes at a time when there's a thin supply of available homes for sale in many markets.
That's helped boost home prices, which jumped 12.2 percent in May from a year earlier — the biggest gain in seven years, according to data provider CoreLogic.
Even so, foreclosures remain a potential drag on housing in many states, including Florida, Nevada, Illinois and Ohio.
"Halfway through 2013, it is becoming increasingly evident that while foreclosures are no longer a national problem, they continue to be a state and local market problem," said Daren Blomquist, a vice president at RealtyTrac.
Homes scheduled for auction in states like Florida, where the courts play a role in the foreclosure process, were up 34 percent in June from a year earlier, the firm said.
Scheduled home auctions doubled last month in New Jersey and Florida, which also posted the highest foreclosure rate of any state — nearly three times the national average — in the first six months of the year, the firm said.
Most homes lined up for public auction typically end up going back to lenders, which opens the door for the properties to be placed on the market as sharply discounted foreclosed homes later this year or in 2014.
Nationally, the inventory of previously occupied homes on the market was 10 percent below prior-year levels in May, according to the National Association of Realtors. So the potential for more foreclosures going on sale will likely be welcome news to would-be home buyers in markets where there is a tight supply of available homes.
The number of homes that entered the foreclosure process in June was down 21 percent from May and about 45 percent below June 2012's total.
Lenders repossessed 35,507 homes last month, down nearly 9 percent from May and a drop of 35 percent from a year earlier.
That's still short of the 25,000 or so a month that Blomquist considers the benchmark for foreclosures in a "normal" housing market.
At the height of the housing boom in 2006, completed foreclosures averaged 22,000 a month. They peaked in September 2010 at 102,000.
Tighter lending standards for home loans since the housing bubble burst have helped slow the pace of foreclosures.
About 75 percent of the 824,292 U.S. homes in the foreclosure process as of June are tied to loans that were originated between 2004 and 2008.
"That's a good sign that the lending has much improved and we're not seeing high foreclosure rates on mortgages that have been taken out since 2008," Blomquist said.
Based on reporting by The Associated Press.