U.S. foreclosure filings surpassed 300,000 for the third straight month in May and could hit a record 1.8 million by the first half of the year, the default data seller RealtyTrac Inc. said Thursday.
A total of 321,480 properties received a default or auction notice or were repossessed last month, up 18% from a year earlier, and one in 398 households received a filing, RealtyTrac said.
"The foreclosure bucket is filling faster than it's emptying," said Jay Brinkmann, the chief economist of the Mortgage Bankers Association. "It will continue through next quarter at least."
More home loans originated in or before 2005 are likely to default as unemployment climbs, said Rick Sharga, the executive vice president for marketing at RealtyTrac, of Irvine, Calif.
A record 1.37% of all loans entered the foreclosure process in the first quarter, with 29% tied to borrowers with prime, fixed-rate mortgages, the MBA reported May 28. Homes in foreclosure accounted for 3.85% of all loans in the quarter, up from 2.47% a year earlier, the MBA said.
"The numbers are getting bigger, and that's what is bothering me," said Patrick Newport, an economist at IHS Global Insight in Lexington, Mass. "You have banks holding these toxic loans, which means bank balance sheets are in even worse shape with the increase in delinquencies."
Additional U.S. home foreclosures will probably total 6.4 million by mid-2011, and inventories of foreclosed homes awaiting sale will probably peak in mid-2010 at about 2 million properties, JPMorgan Chase & Co. analysts led by John Sim wrote in a June 5 report. U.S. prices will likely drop 39% on average, they said.
The May total was the third-highest in RealtyTrac records dating to January 2005.
Nevada had the highest foreclosure rate, one in every 64 households, more than six times the national average. California ranked second, at one in 144 households.
Florida had the third-highest rate, one in 148 households. Arizona ranked fourth, with one in 158, and Utah was fifth, with one filing per 316 households, RealtyTrac said.
Other states among the top 10 in highest rates were Michigan, Georgia, Colorado, Idaho and Ohio.
California had the highest total number of filings, 92,249, 23% more than a year earlier. Scheduled auctions rose 18% from the previous month, bank seizures fell 1% and defaults fell 18%.
Florida had the second-highest total, with 58,931 filings, up 50% from May 2008. Nevada was third with 17,157 filings, up 83%, as bank seizures there rose 23% from the previous month.
Arizona, Michigan, Ohio, Illinois, Georgia, Texas and Virginia rounded out the top 10, which accounted for 77% of total U.S. filings, according to RealtyTrac.
New Jersey had the 24th-highest rate, one in 794 households, and 4,408 filings. Connecticut ranked 33rd, with one in every 1,301 households in some stage of default. The state had 1,106 filings. New York was 37th, with one in 1,646 households getting a filing, for a total of 4,825.
Las Vegas had the highest foreclosure rate among metropolitan areas with a population 200,000 or more. One in 54 households got a notice, up 78% from a year earlier and up 4% from the previous month.
California had six cities among the top 10. Stockton, Modesto, Riverside-San Bernardino and Merced ranked second through fifth, in that order. Bakersfield was seventh and Vallejo-Fairfield was ninth.
Florida had three cities in the top 10. Cape Coral-Fort Myers ranked sixth, Orlando-Kissimmee was eighth and Miami-Fort Lauderdale-Pompano Beach was 10.