February 2013 US Home Foreclosures: Fewer Faced Repossession, But It's Too Soon To Declare A Recovered U.S. Housing Market

Consider the latest figures from real estate information company RealtyTrac Inc.

In February, just over 45,000 homeowners faced foreclosure. That’s much less than half of the 102,000 repossessed homes that marked the peak of the foreclosure disaster in March 2010, which followed the subprime mortgage meltdown that sent the country into recession a year earlier.

“At a high level, the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years,” said Daren Blomquist, vice president at RealtyTrac.

Nationwide foreclosures were down 28 percent in February compared with the same month last year, falling to their the lowest level since September 2007.

But while the worst may be over, the number of foreclosed homes last month is still twice the monthly average seen in 2005, when the firm first began tracking this monthly metric. And while foreclosure starts -- when the repossession process begins -- were down 25 percent year-over-year in February, they were up 10 percent from the previous month following three consecutive monthly declines.

In other words: The housing market is still shaky and could reverse its positive momentum if the U.S. economy -- which will see lackluster growth this year according to most estimates -- takes even a slight turn for the worse.

While some of the most depressed local housing markets have seen the biggest jumps in home prices, especially in California, some states still experienced considerable increases in foreclosures last month, including Nevada, Washington and Iowa.

Consistent jobs growth and low mortgage interest rates have tightened supply and helped the housing market recover. In January, home prices rose by the highest year-over-year rate in six years, which has helped some homeowners' mortgages go from upside-down (when the debt on a home is higher than its value) to right-side up. According to real estate intelligence firm CoreLogic, over 1.4 million homeowners last year saw the values of their homes rise above the money owed on them.