Thousands of Arizona families are sinking into foreclosure every month with no end in sight.

A total of 27,404 properties — or roughly one in every 95 households — entered some stage of foreclosure in the first quarter 2008, a new report by data firm RealtyTrac shows. That’s up nearly 245 percent from the same time last year.

Nationwide, nearly 650,000 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported in the first three months of the year, a 112 percent increase from a year ago, according to RealtyTrac. Arizona posted the third highest foreclosure rate in the nation, behind only Nevada and California.

At the county level, Pinal County recorded 2,021 foreclosure filings; Maricopa County had 21,114; and Pima County reported 1,864 in the first quarter, the report shows. The Valley’s foreclosure rate ranked 7th of 100 metropolitan areas studied by RealtyTrac.

The top 10 states with the country’s worst foreclosure rates also included Florida, Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

You can search for East Valley foreclosure properties at Tribunehomefinder.com.

Home builders are slightly more confident in the housing market these days, at least compared with the end of last year, a new report shows.

But an index tracking builder confidence remained stagnant for the third month in a row in April — up two points from a record-low set in December, according to the National Association of Home Builders.

“While builders continue to report improvement in traffic through their model homes compared with late last year, this activity has not translated to actual sales,” association chief economist David Seiders said.

The National Association of Home Builders/Wells Fargo Housing Market Index gauges builder perceptions of current home sales, sales expectations for the next six months and buyer interest.

Reports from builders in the Valley seem to reflect a similar trend.

Model homes in new subdivisions are getting more buyer interest, but some people are coming back a half a dozen times or more to look at homes and still won’t bite, industry observers say.

Still, things are looking up for the Valley’s new home market.

Home sales have been holding steady for the past three months. And a survey of 4,754 floor plans showed 69 percent either remained at the same price or saw a price increase, according to local analyst RL Brown.

From indexes and LTV ratios to discount points, mortgage industry jargon baffles many borrowers, who often sign the mounds of paperwork put in front of them without ever reading the documents.

As a result, many homeowners have found themselves in loans they didn’t understand and ultimately couldn’t afford, sending them into foreclosure.

The National Consumers League hopes to prevent future foreclosures with a Web site that takes potential buyers through the complicated financing process from choosing the right loan to protecting against predatory lending.

Mortgagetown.org includes advice on how to pick a loan officer, access to a glossary of mortgage terms, information on how to track who owns your mortgage and other tips.

“With millions of homeowners rightfully concerned about predatory lenders, fraud, and foreclosure, it’s critically important that both current and future homeowners are educated, prepared and protected,” said Sally Greenberg, executive director of the consumers group.

Nationwide, sales of new homes dropped 8.5 percent in March and were down 36.6 percent from the same month last year, according to a report from the U.S. Department of Commerce. The median new home price was $227,600.

Here in the Valley, the new home market’s free-fall seems to be coming to an end. Sales have held steady so far this year, hovering between 1,800 and 1,900 a month, a report by housing analyst RL Brown shows.

Some builders are even raising prices in an attempt to create a sense of urgency for buyers.

But the industry isn’t out of the woods just yet. They’re still competing with thousands of bank-owned properties and desperate sellers who are starting to slash prices. Experts say that’s especially true in outlying areas, such as Maricopa, and more foreclosures are on the way.

Nationwide, 70 percent of seriously delinquent borrowers aren’t in any type of loan work-out program despite ramped up foreclosure prevention efforts by lenders and government officials.

That’s according to a new study by the State Foreclosure Prevention Working Group, which tracked data from 13 of the country’s largest subprime mortgage services from October 2007 to January 2008.

In that time, the number of distressed borrowers in loss mitigation has risen but has been matched by an increase in delinquent loans.

“The collective efforts of servicers and government officials to date have not translated into meaningful improvement in foreclosure prevention outcomes,” the report states.

The study also noted that loss mitigation departments at banks have become severely overloaded with delinquent loans — a phenomenon many Valley real estate agents are reporting.

Arizona Attorney General Terry Goddard also said this week that the state needs to explore new approaches to preventing foreclosures.

“We continue to see a rising number of foreclosures in Arizona, which is a significant drag on Arizona’s economy,” Goddard said in a statement.

Nationwide, sales of existing homes fell 2 percent last month, as buyers continued to wait for more price drops and borrowers found themselves shut out of the mortgage market.

The seasonally adjusted annual rate of 4.93 million sales reported in March is also 19.3 percent below a year ago, according to a report from the National Association of Realtors.

“It appears there is some over-reaction on the part of some lenders now in requiring higher downpayment percentages than may be necessary,” association President Richard Gaylord said in a statement.

Despite Arizona buyers facing the same hurdles, sales of existing Valley homes rose in March, bucking the national trend.

A total of 4,335 sales were recorded last month, up 15.6 percent from February but down 19.5 percent from a year ago, according to Arizona State University’s Realty Studies department.

Half of all homes sold in Pinal County last month were bank-owned, compared with 37.5 percent in January, according to a recent report from local analyst RL Brown.

In Maricopa County, 22.3 percent of all sales were homes that had been repossessed by lenders.

The spike in bank-owned properties, called REOs, doesn’t come as a surprise.

Last year’s wave of foreclosures has only grown in 2008 with thousands of Valley families defaulting on their mortgages every month.

Agents say the banks have so many foreclosures and REOs to deal with that it’s sometimes taking months to get a response on a short sale offer.

That’s a major hurdle for struggling homeowners whose only escape from foreclosure is a short sale — when the bank agrees to accept less than what a borrower owes.

One real estate agent I spoke with recently said a couple she was working was foreclosed on while waiting to hear back from the bank on a short sale offer.

The good news is that agents say REO deals take much less time and often offer big discounts. Either way banks are desperate to get rid of tens of thousands of homes, so the deals are out there.

Valley renters can enjoy a little good news in today’s flagging economy.

The average rent here has remained stagnant the last six months, according to a new report from research firm RealFacts. The average rent in the first three months of the year — $817 — was up 1.5 percent from the same period a year ago but unchanged from the fourth quarter 2007, the report shows.

Rent growth has steadily slowed in the past year, as tens of thousands of frustrated home sellers put their homes up for rent amid the housing downturn.

At the same time, developers have thrown failed condominium conversion projects back onto the market as apartments, also upping the supply.

In response to the increased competition, a growing number of landlords are trying to lure in tenants with concessions, such as a month’s free rent. Others are waiving move-in costs.

An estimated one in every 18 Arizona homeowners will face foreclosure in the next two years, according to a new study by The Pew Charitable Trusts.

But while Arizona has one of the highest projected foreclosure rates, the state has been slow to respond to the problem, compared with other more proactive states, such as North Carolina and Ohio, the report states.

Nationwide, the nonprofit organization estimates one and every 33 homeowners will be in foreclosure over the next two years.

Some states have been quicker to experiment with solutions than others.

* Maryland recently extended the foreclosure process from 15 to 150 days.

* Ten states, including Minnesota and North Carolina, have banned most prepayment penalties.

* North Carolina, as well as Colorado, Maine and others, now require lenders to assess a borrower’s ability to repay an adjustable-rate loan after the teaser rate has ended.

* Nine states have established loan funds to help refinance borrowers with loans they can’t afford.

* A total of 13 states, including Arizona, have counseling hotlines.

The list goes on.

In 2007, Arizona created a foreclosure task force. The state also has a consumer hotline and education campaign, the study shows. What Arizona doesn’t have are laws relating to high-cost loans or foreclosure intervention, which others states do. The study also names Florida and Utah as states that have been slower to react to the crisis.

Still, it remains unclear whether the measures being taken by other states will be successful and to what extent.

Nationwide, building permits for new homes last month dropped 5.8 percent from February and were down 40.9 percent from a year ago, according to the Department of Commerce.

Experts say the building slowdown is a good sign because metropolitan areas like Phoenix are still trying to work through a glut of homes for sale.