Home repossessions in the U.S. jumped 11% in May after declining for the previous five months as rising prices and limited inventory for sale across the country spurred banks to complete foreclosures.

Lenders took back 38,946 homes, up from 34,997 in April, according to Irvine, California-based data firm RealtyTrac, which tracks notices of default, auction and seizures. 33 states had increases in the number of homes repossessed, RealtyTrac said in a report today.

Banks are more willing to move to the final stage of foreclosure because there is sufficient demand and prices are improving, said Eric Workman of Tinley Park, Illinois-based Mack Cos., which aggregates single-family rental homes and resells them to individuals and institutional investors. U.S. home prices advanced almost 11% in the year through March, the biggest 12-month gain since April 2006, according to the S&P/Case-Shiller index of values in 20 cities.

"For a very long period of time, the market in general and specifically banks were unsure of what these assets were valued at," Workman, vice president of sales and marketing at Mack, said in a telephone interview. "With increasing stability of the economy and housing prices throughout the U.S., these banks and sellers are getting much more comfortable with the value of their properties."

Private-equity firms, hedge funds and individuals are all buying foreclosed or distressed homes to turn into rental properties as prices remain 28% below their 2006 peak. Companies including Blackstone Group LP, which has invested more than $5 billion to buy almost 30,000 homes, and Colony American Homes Inc., which owns more than 12,000 properties, are helping to increase prices in areas hit hard by the real estate crash by draining the market of inventory as low mortgage rates and improving employment fuel demand from buyers.

"There are plenty of companies out there that will buy assets throughout the range of condition because the demand for finished quality inventory is so high," Workman said.

Metropolitan areas that experienced the brunt of the housing bust and the most foreclosures have experienced some of the biggest rebounds. Median home prices in Phoenix soared 21% in May from a year earlier to $175,236, followed by Tampa, Florida, which was up 20% to $118,000; Riverside- San Bernardino, California, up 18% to $220,000; and Miami, up 16% to $160,000, according to RealtyTrac.

Inventories have fallen for listings of all types, Seattle- based Zillow Inc. said today. The supply of homes listed with the online service is down 12% this month from a year earlier, with inventory tightest for pricier homes, Zillow said. In January the total drop was almost 18%.

Four of the five largest home lenders that signed a nationwide settlement with regulators over alleged abuses in their foreclosure practices increased repossessions in May. Changes in procedures following the two-year investigation and accord, as well as government programs for homeowners, had slowed the rate of seizures.

"Foreclosures have been artificially depressed through government regulation and policy, and are going back to where they should have been," Michael Krein, president of the National REO Brokers Association, said in a telephone interview. "Prices are rising rapidly in some markets because of the shortage."

Citigroup Inc. was the only bank among the five that settled last year with U.S. and state officials that didn't post an increase in repossessions, as Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc. all showed gains, RealtyTrac said.

"Given the shortage of inventory and rising home prices, banks have little motivation to hold back on any foreclosures, so homeowners who have not been making payments for several months or even years without a foreclosure notice should expect to see that notice coming," Craig King, an agent at the Reno, Nevada-based Chase International brokerage, said in RealtyTrac's report.

The biggest annual jumps in states with more than 1,000 home repossessions occurred in North Carolina, up 60% from the previous month, followed by gains of 44% in both Wisconsin and Illinois, 23% in Colorado and 19% in Michigan, according to RealtyTrac.

Last month's repossession total was less than the 42,606 average so far this year and well below 91,110 for the first nine months of 2010, Daren Blomquist, RealtyTrac vice president, said in an e-mail. That peak came just before banks were accused of shoddy foreclosure procedures and record-keeping. Seizure notices have averaged 59,976 since October 2010, he said.

The current pace of home seizures would result in more than a half million repossessions by the end of the year, compared with 671,251 in 2012, RealtyTrac said.

"However, the numbers for 2013 could be higher if the increase in May continues and lenders have a good market to unload distressed inventory," Blomquist said.

A total of 148,054 foreclosure filings, including default, auction and repossession notices, were sent to U.S. properties last month, an increase of 2% from April and down 28% from a year earlier, according to RealtyTrac. One in 885 U.S. households got a filing.

Florida had the highest rate of filings per household in May at one in 302, followed by Nevada at one in 305 and Ohio at one in 584. Maryland ranked fourth at one in 587 and South Carolina was fifth at one in 600, the data firm said.

More foreclosures are likely as initial filings increased in 26 states from the previous month and in 14 states from a year earlier, RealtyTrac said. First-time default notices more than tripled in Maryland, more than doubled in Connecticut and Hawaii, and rose more than 80% in Arkansas, New Jersey and Nevada.

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