LOS ANGELES -- Lenders repossessed fewer U.S. homes in January, bringing the number of completed foreclosures down to the lowest level in more than six years.

Even so, many states posted sharp increases in the number of homes entering the foreclosure process for the first time, a trend that raises the likelihood that those states will see a surge in foreclosed homes later this year.

Banks took back 30,226 homes last month, a drop of 4 per cent from December, foreclosure listing firm RealtyTrac Inc. said Thursday.

Completed foreclosures were down 40 per cent from January last year to the lowest level since July 2007, the firm said.

A dozen states posted annual increases in foreclosures, including New York, Oklahoma, Connecticut and New Jersey.

While foreclosures remain elevated in many populous states, they have been steadily on the wane since the U.S. housing market and economy began to rebound after years of decline.

The U.S. housing market has emerged from a deep slump, aided by rising home prices, steady job growth and fewer troubled loans dating back to the housing-bubble days. Meanwhile, more homeowners are keeping up with their mortgage payments.

That's led to fewer homes entering the foreclosure pipeline on a national level.

In some states, however, there is a backlog of homes with mortgages gone unpaid. Typically these are states like New York and Florida, where the courts play a role in the foreclosure process. In other states, like California and Nevada, laws aimed at stalling foreclosures have extended the time it takes for the process to play out.

As a result, some of those homes with mortgages gone unpaid are only now entering the foreclosure process or being scheduled for auction.

"We're going to have this year some states that are still seeing the last surges in foreclosure activity because of continued delays in the process," said Daren Blomquist, a vice-president at RealtyTrac. "Not even an improving economy may help a lot of these."

Last month, 22 states posted annual increases in homes that got started on the path to foreclosure. Maryland, Connecticut, New Jersey and California had the biggest increases. In California, foreclosure starts rose on an annual basis for the first time in more than a year.

All told, banks initiated foreclosure actions against 57,259 U.S. homes last month, a 10 per cent jump from December, RealtyTrac said. Foreclosure starts typically pick up in January after slowing in December. They were down 12 per cent from a year ago.

Many of these homes are likely to begin making their way through the foreclosure process this year, Blomquist said.

That said, Blomquist said he expects that completed foreclosures will decline nationally this year from 2013, when they totalled 462,970.

Foreclosures peaked in 2010 at 1.05 million and have been declining ever since.