The number of foreclosure starts in the US reached the lowest level in seven years during the third quarter, providing further evidence of a recovering housing market, according to the latest data from RealtyTrac.

A total of 174,366 US homes began the foreclosure process during the third quarter, a 13% drop from the previous quarter and 39% less than in Q3 2012 and reaching the lowest level since Q2 2006.

Overall foreclosure activity during the third quarter was at its lowest quarterly level since 2007, due in large part to a decrease in the number of foreclosure filings in September, including default notices, scheduled auctions and bank repossessions, RealtyTrac reports.   However, while the report offers signs of an overall US housing market recovery, some markets are still struggling with foreclosure activity, including Florida where foreclosure activity dropped 8% in Q3 after six quarters of annual increases. Despite the recent drop, Florida still has the highest foreclosure rate of any US state, with 1-in-126 homes filing for foreclosure in Q3.

Nevada is second highest nationally and foreclosure activity increased 10% from the previous quarter and is up 21% compared to Q3 2012.