After a 36 percent month-to-month jump in August and continued unrest in the mortgage market, it would be easy to assume that the U.S. foreclosure rate would continue to skyrocket. The good news is that foreclosure activity (default notices, auction sale notices, and bank repossessions) decreased eight percent (from a 32-month high) nationally in September according to a monthly study conducted by RealtyTrac, an online marketplace for foreclosure properties. But the bad news is that the rates are up 99 percent from September 2006 and Nevada, despite seeing an 11 percent drop in activity, continues to hold the nation's highest rate of foreclosures.

For September, Nevada is reporting one foreclosure for every 185 households and 5,504 foreclosure filings, which is up 187 percent from September 2006. The executive director of the Southern Nevada Home Builders Association (SNHBA), Irene Porter, says certain factors are being ignored in Nevada's nine-month reign atop the nation's foreclosure list.

"It's bad but it is not as huge a number as it appears to be because you have to take into consideration the amount of housing we've built in the last few years," Porter told BUILDER Online. "It is part of the nationwide problem we have as a result of [bad] mortgages and investor buying. A good number of [Nevada's] foreclosures are related to the investor buy."

Nationally, 223,538 foreclosure filings occurred with an average of one foreclosure for every 557 households. Although nearly 40 states are reporting a decrease in foreclosure activity, James J. Saccacio, RealtyTrac's CEO says it is too early to read much into September's figures - the numbers could be a fluke or they could be a sign of better things to come.

"U.S. foreclosure activity experienced a fairly broad-based retreat in September, with 39 states reporting decreasing activity and national numbers down in all foreclosure categories - defaults, auctions, and bank repossessions," said Saccacio. "Nevertheless, it's important to note that September's total was still the second highest monthly total we've seen since we began issuing our report in January of 2005. It's too early to tell if September's numbers represent a one-month lull or if they could signify that more buyers and investors are getting back in the market and snatching up discounted foreclosure properties, thereby providing a release valve for distressed homeowners and overwhelmed lenders."

Florida, California, and Ohio joined Nevada atop the foreclosure activity list with the "Sunshine State" reporting one foreclosure for every 248 households and 33,354 filings. California filed the nation's highest number of foreclosures with 51,259, with a rate of one filing per 253 households. Ohio's 15,709 foreclosure filings are the third highest for September.

Cities in California and Florida posted eight of the top 10 metro foreclosure rates in September, with California claiming six spots and Florida two. Merced, Calif., reported the highest metro foreclosure rate in the nation with one foreclosure filing for every 68 households. California cities Modesto, Stockton, and Riverside-San Bernardino follow Merced in the two, three, and four spots respectively. Other California metros in the top 10 are Vallejo-Fairfield at No. 8 and Sacramento at No. 10.

Florida's Fort Lauderdale and Cape Coral-Fort Myers registered the sixth and seventh highest metro foreclosure rates. Detroit (fifth) and Las Vegas (ninth) are the other two metro areas to land in the top ten.

RealtyTrac's report comes one day after the Bush Administration announced the formation of a mortgage industry coalition aimed at "helping homeowners stay in their homes" according to Treasury Secretary Henry M. Paulson. The new coalition has been dubbed HOPE NOW and 11 of the largest mortgage service companies will join the initiative. Other members will include mortgage counseling agencies, investors and large trade organizations. Although Paulson is commending the formation of an industry alliance, he remains cautious.

"Let me be clear. I'm not announcing we have solved this problem," Paulson said in a released statement. "What we're announcing is a necessary step toward a very important objective. We all have a lot more work to do."

Trouble in the housing sector has definitely caught the attention of both the nation's lawmakers and the White House; the formation of the HOPE NOW coalition comes just five days after Capitol Hill's top democrats called for President Bush to appoint a "mortgage czar."

Click here to download an Excel spreadsheet detailing the June foreclosure activity across the nation.

Learn more about markets featured in this article: Cape Coral, FL, Riverside, CA, Las Vegas, NV, Los Angeles, CA.