Foreclosures dropped in November, according to data released today by RealtyTrac. Nationally, filings—which include default notices, scheduled auctions, and bank repossessions—were down 3% from October and 14% lower year-over-year.

However, a menacing tide rose to deliver the narrowest annual decrease seen in 12 months, suggesting more pain on the horizon. "Despite a seasonal slowdown similar to what we’ve seen in each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll in to the market as REOs or short sales sometime early next year," said James Saccacio, co-founder of RealtyTrac.

However, states such as California, Arizona, and Massachusetts are already reporting annual increases in November, a harbinger of what’s to come for the rest of the country. "Those states have often led the trend," said Darin Blomquist, a RealtyTrac spokesperson, on a call with Builder yesterday. "And this is a trend we’ve been expecting to see, these year-over-year increases nationwide."

But that news may not be as bad as it sounds, Blomquist says, since November’s annual comparisons are being made with last year’s artificially low numbers, which were pushed down by paperwork and robo-signing issues. "It’s like a credit card. That money isn’t coming out of your account when you first swipe your card, but eventually the money does come out," he said. "So things are looking worse than they actually are."

In coming months, Blomquist expects to see increases in foreclosure rates ranging from 5% to 10% in markets across the country, with "more dramatic increases in some places because the delays have been more severe."

That, he says, is what happened in California in November. With a total of 63,689 filings last month, the state had more foreclosures than any other in the country and accounted for 28% of the nation’s total. California also claimed the second-highest foreclosure rate among states (after Nevada) and was home to nine of the 10 highest-foreclosing metro areas, with Las Vegas being the only exception.

Florida reported the second-highest number of foreclosures with 24,739 filings, despite a 25% decrease in activity from October. Other states in the top five included Michigan, Illinois, and Georgia.

When ranked by highest rate of foreclosure, Nevada and California were followed by Arizona, Utah, and Georgia.

By foreclosure type, the data revealed that the wave of filings that surged in August has yet to work its way through the system. While default notices were down 8% on a monthly basis and down 9% annually; and lender repossessions were down 17% on both a monthly and yearly basis, the bulge was evident in foreclosure auctions, which surged 13% from October. Many states saw monthly gains of much more, including a 63% increase in California, a 56% jump in Washington, and a 53% gain in Ohio.

By the end of next year and into the beginning of 2013, Blomquist is hopeful that things will even out and foreclosure filings will be moving more steadily downward. But as for what to expect from foreclosures in coming months, Blomquist says, "in 2012, we’ll have to pay back what we borrowed in 2011."

Claire Easley is a senior editor at Builder.

Learn more about markets featured in this article: Greenville, SC.