Foreclosure activity reached a 5-year low in September with only 180,427 filings made on distressed properties, RealtyTrac said Thursday.

The filings surveyed include default notices, scheduled foreclosure auctions and bank repossessions.

Overall, September's foreclosure numbers fell 7% from August and 16% from last year as more non-judicial foreclosure states moved through backlogs of foreclosure inventory.

Third-quarter foreclosure numbers also reached a five-year low with 531,576 filings reported, a 13% drop from last year and the ninth consecutive quarter of declines.

"We've been waiting for the other foreclosure shoe to drop since late 2010, when questionable foreclosure practices slowed activity to a crawl in many areas, but that other shoe is instead being carefully lowered to the floor and therefore making little noise in the housing market — at least at a national level," said Daren Blomquist, vice president at RealtyTrac. "Make no mistake, however, the other shoe is dropping quite loudly in certain states, primarily those where foreclosure activity was held back the most last year."

The steep drop in activity is attributed to significant declines in foreclosure inventory levels within nonjudicial foreclosure states such as California, Georgia, Texas, Arizona and Michigan.

The states of Florida, Illinois, Ohio, New Jersey and New York continue to see high foreclosure numbers with filings rising in the third-quarter and September.

While the nonjudicial foreclosure state of California saw foreclosure starts fall 45% from last year, gains made in certain states could be disrupted by pending legislative changes.

Analysts have already projected California will become a quasi-judicial foreclosure state now that financial firms are wary of the state's Homeowner Bill of Rights and the penalties associated with it.

"Several states where the foreclosure flow was not so dammed up last year could see a roller-coaster pattern in foreclosure activity going forward because of recent legislation or court rulings that substantively change the rules to properly foreclose," Blomquist added. "A backlog of delayed foreclosures will likely build up in those states as lenders adjust to the new rules, with many of those delayed foreclosures eventually hitting down the road."