NEW YORK (

TheStreet

) -- The number of homes in foreclosure dropped 23% year-over-year in March, according to the latest report from

CoreLogic.

Approximately 1.1 million homes were in some stage of the foreclosure process, down from 1.5 million in March 2012.

The number of homes lost to foreclosure totaled 55,000 in March, up 6% from a revised February estimate of 52,000, but down from the 62,000 reported in March 2012.

The continued decline in the foreclosure inventory rate bodes well for the housing recovery. Foreclosed homes depress property prices and the decline in the number of completed foreclosures has helped tighten supply, fueling the rise in home prices.

Still, the numbers aren't exactly healthy. Prior to the housing bust, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006. Since the crisis began in September 2008, 4.2 million homes have been seized through foreclosure.

Judicial foreclosure states, which require banks to prove a borrower is in default in court before proceeding to foreclose on them, continued to exhibit higher than average foreclosure rates. In Florida, for instance, 9.7% of mortgages were in some stage of foreclosure during March, compared to the nationwide average of 2.8%.

California, which is among the five states with the highest number of completed foreclosures, saw its foreclosure inventory rate decline by 1.4 percentage points. The state enacted tough foreclosure protection laws last year, which has slowed down the number of foreclosure filings, as banks adjust to the new rules.

Banks have opted for alternatives other than foreclosure as costs have soared in the wake of the crisis and new laws. Still, analysts hold that we could see

foreclosures continue to be elevated

for the next few years as the courts work through the backlog of foreclosure cases.

-- Written by Shanthi Bharatwaj in New York.

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