The increase in repossessions came even as the number of properties starting the foreclosure process slowed for the seventh month in a row, foreclosure-listing firm RealtyTrac said Thursday.

In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.

The increases were even greater in Washington. Compared with last August, foreclosures rose a whopping 156 percent in King County, 161 percent in Snohomish County and 55 percent in Pierce County.

August makes the ninth month in a row that the pace of homes lost to foreclosure nationally has increased on an annual basis. Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market. But they can't afford to simply dump the properties on the market.

Concerns are growing that the housing recovery could stumble amid stubbornly high unemployment, a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.

That's one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.

"These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer's market with too much distressed inventory for fear of what it would do for house prices," he said.

As a result, lenders are putting off initiating the foreclosure process on homeowners who have missed payments, letting borrowers stay in their homes longer.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million households are likely to lose their homes to foreclosure this year.

In all, 338,836 properties received a foreclosure-related warning in August, up 4 percent from July but down 5 percent from the same month last year, RealtyTrac said. That translates to one in 381 U.S. homes.

That ratio was one in 434 in King County, one in 304 in Snohomish County and one in 307 in Pierce County.

RealtyTrac tracks notices for defaults, scheduled home auctions and home repossessions � warnings that can lead up to a home eventually being lost to foreclosure.

Among states, Nevada posted the highest foreclosure rate last month, with one in every 84 households receiving a foreclosure notice. Rounding out the top 10 states were: Florida, Arizona, California, Idaho, Utah, Georgia, Michigan, Illinois and Hawaii.

Washington ranked 14th. Rural Lewis County had the highest foreclosure-notice rate, followed by Snohomish, Clark, Pierce and Island counties.

Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.

Seattle Times business reporter Eric Pryne contributed to this report.