In August, the number of homeowners entering the foreclosure process, known as foreclosure starts, fell below pre-recession levels for the first time. In some states, the decline in foreclosure starts has been even more pronounced, according to data released by housing research firm RealtyTrac.

In Illinois, the number fell by more than two-thirds in August, compared to a year ago. Despite the improvement, many of the states with the biggest declines in foreclosure starts also had among the highest foreclosure rates.

Click here to see where foreclosures fell the most

As evidence of how hard many of these states were hit — even with 50% or more improvement in foreclosure starts in the past year — many still had among the most foreclosures in August. Florida, which had a 60% year-over-year decline in foreclosure starts, was still second in the country in August, with more than 5,200 new properties entering the process.

RealtyTrac Vice President Daren Blomquist told 24/7 Wall St., “I think that speaks to the fact that these states were incredibly hard hit by foreclosures. Now, even with these huge decreases, you’re still seeing thousands of families enter the foreclosure process.”

Double-digit unemployment rates during the recession in states like Arizona, Florida and Michigan contributed to high levels of foreclosed properties. Plunging home values left thousands of homeowners owing more on their mortgages than their houses were worth. As a result, many mortgage holders simply walked away and many others were forced into foreclosure proceedings.

Blomquist also noted that the amount of time foreclosures take to process can have an impact on the number of homes in foreclosure in a state. Generally, foreclosures take longer in states that require a judicial process. However, because these are new foreclosures being measured, Blomquist said the time to foreclosure should not be a major factor for these states.

To identify the states with the biggest decline in foreclosures, 24/7 Wall St. reviewed the ones with at least 500 foreclosure starts as of August 2013 that had a year-over-year decline in starts of 50% or more, based on data provided by RealtyTrac. RealtyTrac also provided the number and rate of housing units in foreclosure for August. Historical home price declines and projections were from Corelogic-Case Shiller’s home price index. All data used was the most recent available.

These are the states with the biggest drops in foreclosures.

9. Virginia
> 1-yr. change foreclosure starts: -50.0%
> August foreclosure starts: 1,054 (17th most)
> Median home price: $298,000 (19th highest)

In Virginia, just one in every 2,126 housing units was in foreclosure in August, the best performance of any state on this list. That could be due in part to the relatively small decline in home prices over the five-year period from 2008 to 2013, compared to double-digit declines in several of the states on this list. Virginia had a median home price of nearly $300,000 in July, compared to a national median of $174,500.

Also Read: The Best Economies in the World

8. Tennessee
> 1-yr. change foreclosure starts: -51.0%
> August foreclosure starts: 646 (24th most)
> Median home price: $124,000 (4th lowest)

While the decline in foreclosures is encouraging for the housing market, Tennessee had the fifth-highest percentage of short sales in July among the 50 states, trailing only Nevada, Florida, Maryland and Washington. Tennessee’s median home price is among the lowest in the country. The state also struggles with high unemployment. Good news for one of the state’s housing markets: the Nashville metro area made RealtyTrac’s list of top markets for healthy living and home price appreciation.

7. Michigan
> 1-yr. change foreclosure starts: -55.0%
> August foreclosure starts: 1,849 (11th most)
> Median home price: $91,000 (the lowest)

While the decline in foreclosure starts bodes well for the state economy, Michigan still had among the most foreclosure starts in the country in August. Better news is that Michigan is one of a dozen states where foreclosure activity is below the level it was before the housing bubble burst. RealtyTrac is forecasting a 3.3% rise in home prices this year, which could help clear the inventory of foreclosed properties. But the state’s economy still needs a shot in the arm — the number of manufacturing jobs in Michigan is 70,000 below its level in 2007.

6. North Carolina
> 1-yr. change foreclosure starts: -56.0%
> August foreclosure starts: 711 (23rd most)
> Median home price: $149,000 (15th lowest)

While house prices in North Carolina increased only modestly in the past year, the state also did not experience the double-digit home price declines other states did during the housing crash. Between the beginning of 2008 and the start of this year, prices fell by just 8.8%, compared to a national decline of more than 14%. Unlike many of the states with large declines in foreclosure starts this year, North Carolina has a relatively low foreclosure rate, with just one in every 1,816 units in the process, compared to a national rate of roughly one out of every 1,000 units.

5. California
> 1-yr. change foreclosure starts: -57.5%
> August foreclosure starts: 7,085 (the most)
> Median home price: $349,000 (17th highest)

After a steep decline during the recession, home prices have been rising in California, with some areas seeing year-over-year gains of as much as 27%. The drop in foreclosure sales is contributing to that rise. The number of new foreclosure starts in August was by far the highest among the states on this list, but the nearly 58% decline in those new foreclosures is welcome news. Only one in every 901 housing units in California is in foreclosure, compared with one in every 383 in Florida.

4. Florida
> 1-yr. change foreclosure starts: -64.6%
> August foreclosure starts: 5,220 (2nd most)
> Median home price: $131,000 (8th lowest)

Although foreclosures starts in the sunshine state have dropped precipitously in the past year, the state economy only slowly is making a comeback from the recession. Nearly half the drop in the unemployment rate from 9.4% in December 2011 to 7.1% in July is attributed to people dropping out of the labor force. Foreclosures may be declining in Florida, but the state’s biggest problem lingers: one in every 383 housing units is still in foreclosure in August, the second-highest rate in the country.

Also Read: The Most Dangerous Cities in America

3. Washington
> 1-yr. change foreclosure starts: -64.9%
> August foreclosure starts: 1,192 (16th most)
> Median home price: $239,000 (21st highest)

In Washington, one in every 1,146 housing units was in foreclosure, down by more than 40% from a year prior. The state’s economy and housing market appears to be recovering. Unemployment fell by 1.4% between July 2011 and July 2012, tied for the fifth-best improvement in the country. Home prices also rose by nearly 10% in 2012, the 11th-largest increase in the country.

2. Arizona
> 1-yr. change foreclosure starts: -64.9%
> August foreclosure starts: 1,552 (12th most)
> Median home price: $167,500 (19th lowest)

Since the beginning of 2008, Arizona’s home prices are down by more than 22%, among the biggest declines in the country. The state’s economy is growing very slowly. It ranked just 43rd in July in private sector job creation since unemployment hit a peak in February 2010. Unemployment is still high, and as of July, the state had the 15th-highest unemployment rate in the country.

1. Illinois
> 1-yr. change foreclosure starts: -66.2%
> August foreclosure starts: 2,901 (7th most)
> Median home price: $165,000 (18th lowest)

While Illinois foreclosure starts dropped the most among the states with high foreclosure activity, the state also had the second-most foreclosed properties in the country in August. Things may be looking up for the state’s housing market, however. Moody’s Investors Service recently upgraded the overall outlook for Illinois from “negative” to “stable” on the basis of improvements in the state’s labor and housing markets. Case Shiller-CoreLogic projects home prices will rise 4.6% annually between this year and 2018, one of the biggest increases in the country.

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