U.S. foreclosures at lowest level in five years: RealtyTrac Thu Oct 11, 2012 12:06am EDT (Reuters) - Foreclosure filings on U.S. homes in September fell to their lowest level in five years, but some states are still seeing their foreclosures rise, a report from RealtyTrac said on Thursday. The overall decrease put the combined number of reported default notices, scheduled auctions, and bank repossessions at 180,427 - the lowest total since July 2007. That's also 7 percent less than August' s foreclosure rate, and down 16 percent from September 2011. "The five-year low, combined with the fact that the year-over-year decrease in foreclosures was in its twenty-fourth straight month, is evidence that we're past the worst of foreclosure crisis," said Daren Blomquist, vice president of RealtyTrac. September's decreased foreclosure activity helped drop foreclosures for the third quarter down to the lowest level since the fourth quarter of 2007. Foreclosure starts - initial default notices or scheduled auctions - were down 12 percent nationwide in September from August, and decreased in 31 states. The news is not universally good. Fewer foreclosure starts, said Blomquist, could mean an increase in short sales. Short sales, which take place before a home is formally repossessed, can drag down housing prices by increasing supply. Still, Blomquist said, short sales are "still the lesser evil: foreclosures tend to sell at even lower prices." And some states - particularly those that make lenders go through the courts to foreclose on properties - registered a year-over-year increase in the number of foreclosures in the third quarter because they are still dealing with a backlog. The average number of days it took lenders to foreclose hit a record 382 days overall. "Much of the downward trend is good news, but part of it is exaggerated by the fact that it's taking longer to foreclose, which automatically reduces the foreclosure numbers," said Blomquist. A longer process means a bit less pain in the short-term, but it means it takes longer for the housing market to fully rid itself of the foreclosure albatross. Only four states with non-judicial foreclosure rules registered an increase in activity in the third quarter. Washington state saw a 70 percent increase from the previous quarter, and was up 15 percent from the third quarter of 2011. Florida, a judicial state, ranked highest in the nation in September and the third quarter for the first time since 2005. One in 117 Florida housing units had a foreclosure filing in the third quarter, more than twice the national average of one in 248 housing units. Reporting By Atossa Araxia Abrahamian; Editing by Tim Dobbyn