For 10 months, RealtyTrac, a real-estate database company, has been downplaying declines in home foreclosure rates as illusory. The lower numbers are more likely an indicator of processing delays stemming from October's robo-signing scandal, RealtyTrac kept saying.

But today's number, showing a 35 percent decline in July from a year earlier -- the lowest level in almost four years -- may have convinced RealtyTrac that the downward trend is more than a paperwork logjam. The processing delays, "combined with the smorgasbord of national and state-level foreclosure prevention efforts," RealtyTrac CEO James Saccacio said in a statement, "may be allowing more distressed homeowners to stave off foreclosure." 

Foreclosure activity comes in three flavors: default notices, foreclosure auctions and lender repossessions. One in 611 households got one of those in July, but all three categories declined for the month and on an annual basis. “The downward trend in foreclosure activity has now taken on a life of its own,” Saccacio said.

Can it really be that the foreclosure peak is finally behind us? We hate to be a spoiler, but you may want to curb your enthusiasm: Even if foreclosures are declining, that doesn't mean the housing market is about to get better. The shadow inventory of homes that are vacant and held off the market remains formidable. The U.S. Treasury Department in May estimated that it was close to 4 million homes.  Home prices, moreover, continue to decline. The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent in May from a year earlier, the biggest 12-month drop since November 2009.