CRYSTAL LAKE – The number of McHenry County homes entering the foreclosure process fell 62 percent in August to 266 homes, down from 695 homes in August 2012, foreclosure listing firm RealtyTrac Inc. reported Thursday.
Foreclosure activity in the county fell nearly 14 percent from July, when 308 homes entered some stage of the foreclosure process. RealtyTrac found the median sales price of a foreclosure home was $120,000 in July, or 32 percent lower than the median sales price of $177,500 for a nondistressed home during the same month.
In McHenry County, one in every 460 housing units was in some stage of the foreclosure process. The towns with highest rates of foreclosure last month were Wonder Lake, with one in every 254; Ringwood, with one in every 340; Lake in the Hills, with one in every 349; McHenry, with one in every 363; and Richmond, with one in every 378.
In Kane County, there were 333 foreclosure starts, down nearly 79 percent from 1,555 a year ago. In Lake County, there were 330 foreclosure starts in August, off 78 percent from 1,501 in August 2012.
Statewide, home foreclosure activity fell 6 percent in August compared with July, and has fallen almost 60 percent in the past year.
The RealtyTrac report shows Illinois with 7,289 foreclosure filings in August. That represents a rate of one in every 725 housing units – the eighth-highest in the nation. Filings include default notices, auction-sale notices and bank repossessions.
Nationally, lenders initiated foreclosure action in August against the fewest U.S. homes for any month in nearly eight years, a trend that should help reduce the number of homes lost to foreclosure in the months ahead.
Some 55,775 homes entered the foreclosure process last month, a decline of 8 percent from July and down 44 percent from August last year, according to RealtyTrac.
The national slowdown in foreclosure starts reflects an improving housing market, steady job growth and fewer troubled loans dating back to the pre-housing bubble days.
Although the risk of foreclosure remains elevated in several states, including Florida, Nevada and Ohio, the pace of homes starting on the foreclosure path has been declining nationally in concert with the housing market rebound.
At their current pace, RealtyTrac expects monthly foreclosure starts to fall to around 52,000 a month early next year. That's the pace the company considers normal.
"We're not quite there, but almost there," said Daren Blomquist, a vice president at RealtyTrac.
Foreclosure starts fell on an annual basis last month in 38 states, including Colorado, Arizona, Washington and California. They increased on a monthly basis in 17 states, including Nevada, Ohio and New York, the firm said.
All told, foreclosure starts have declined on an annual basis the past 13 months, aided by rising home values, which make it easier for homeowners who may have been in negative equity, or owed more than their home was worth, to refinance or sell their home.
Some 7.1 million homes, or 14.5 percent of all U.S. homes with a mortgage, were in negative equity at the end of the second quarter, according to data provider CoreLogic. That's down from 9.6 million, or 19.7 percent of homes with a mortgage, in the previous three months.
Through the first half of this year, nearly 3.5 million homeowners have returned to positive equity, CoreLogic said.
While fewer homes are entering the foreclosure process, lenders have stepped up home repossessions in recent months.
Completed foreclosures rose 6 percent last month versus July, the third monthly increase in four months.
Much of the increase came about in states where courts oversee the foreclosure process. Those courts were backed up with cases two years ago, but have been making progress working through their backlog.
The number of homes taken back by banks last month climbed on an annual basis in 23 states, including New York, Florida and New Jersey, but was down 25 percent nationally, RealtyTrac said.
As Aug. 31, there were about 1.3 million homes in some stage of foreclosure or owned by banks, down about 5 percent from a year earlier.
Completed foreclosures are now on track to finish the year at 490,000, down about 26 percent from 2012's total, Blomquist said.
Foreclosures peaked in 2010 at 1.05 million and have been declining ever since. The trend has been accelerating as U.S. home prices have increased and the job market has improved.
Blomquist expects foreclosures nationally will reach a normal level around the first quarter of 2015.
It could take a bit longer in states such as Nevada, which topped the nation last month with a foreclosure rate of more than two and a half times the national average.
RealtyTrac measures foreclosure rate by tallying the number of homes that receive a foreclosure-related filing, such as an initial default notices or a notice of scheduled auction.
Florida clocked in last month with the second-highest foreclosure rate in the nation, followed by Ohio, Maryland and Delaware to round out the top five.
• The Associated Press contributed to this report.