Foreclosure filings, which continue to serve as a gauge for when the housing market might recover, fell to their lowest level in two years in November, when all foreclosure activities declined by 21% from the previous month, and by 14 percent from the same month last year.

RealtyTrac, the online marketplace for foreclosures and related information, on Wednesday stated that 262,339 foreclosures of U.S. properties—including default notices, auctions and bank repossessions—were reported last month.

While one in every 492 homes in America has received a foreclosure filing, the volume of activity has continued to slow. In fact, the monthly and year-to-year percentage declines were the highest that RealtyTrac has reported since it started publishing monthly updates in January 2005.

Whether these declines are sustainable, though, is in question since the recent falloff in foreclosure activity appears to be related to lenders “hitting the pause button” after revelations about robo-signings and shoddy paperwork, according to Jim Saccacio, ReatyTrac’s CEO.

Still, the number of default notices alone issued in November, 78,955, was down 21% from November 2009 and represented the lowest level of notices filed since July 2007. In states where judicial foreclosures are being enforced, the year-to-year falloff was even steeper, 31%.

For the 47th straight month, Nevada led the country in foreclosures, although activity in that state in November was down 20% from the previous month. RealtyTrac also reports sharp drops in activity in Arizona, Florida, California, and Michigan. Consequently, Utah, with a 60.3% increase in foreclosure activity compared to November 2009, jumped to second among all states.

Third-ranking California accounted numerically for 22% of the country’s foreclosure activity in November. Florida ranked second, even though it’s a judicial foreclosure state and default notices there were down in November by 42%, auctions decreased by 46% and repos were lower by 20%.

The Las Vegas market, where one in every 86 households has been foreclosed on, was the metro area with the highest foreclosure activity in November, although activity there abated a bit; it was down 19% from the previous month and 21% from November 2009. Following Vegas in this dubious ranking were Stockton and Bakersfield, Calif.; in fact, seven California metros ranked among the top 10 for foreclosure activity last month. Only one market in Florida—Port St. Lucie—ranked among the top 10.

What November’s foreclosure activity augurs for the future remains unclear. In recent interviews with MarketWatch and The Wall Street Journal, Rick Sharga, RealtyTrac’s senior vice president, predicted that bank repos for all of 2010 would be up 33%, to 1.2 million, over 2009, and that repos in 2011 would be even higher, although Sharga expects foreclosures to start receding sometime next year. MarketWatch also quoted a recent report that foreclosure activity continues to have a negative impact on home values, which Zillow estimates will fall by another $1.7 trillion in 2010.

John Caulfield is senior editor for BUILDER magazine.

Learn more about markets featured in this article: Las Vegas, NV, Port St. Lucie, FL.