The US housing market continued to deteriorate last month as bank repossessions of homes more than doubled while the number of foreclosures jumped by 57 per cent.

The owners of 234,685 US homes issued foreclosure filings last month, a 5 per cent rise on February, with the states of Nevada, California and Florida hit the hardest during the 12 months to March. Total bank repossessions soared 129 per cent from a year ago.

Rick Sharga, the vice president of marketing at RealtyTrac, said: "We’re going to see quite possibly a record amount of foreclosure activity in the third or fourth quarter.

"What we’re really looking at is ongoing fallout from people overextending themselves to buy homes they couldn’t afford and using highly toxic loan products to get into the houses in the first place."

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A foreclosure is a legal process typically set in motion when a borrower falls 90 days behind on mortgage payments. There are three phases of the foreclosure process in most states — an initial default notice, notice of a scheduled auction, and an “REO” filing if the property is not sold at auction but instead repossessed by the bank.

About 40 per cent end in a forced sale or repossession of the house, while the bank and borrower reach an alternative payment schedule in the remaining cases.

Rising foreclosures will further depress prices by adding more houses to a market where supply already exceeds demand while America is still counting billions of dollars worth of losses from the sub-prime mortgage crisis where people with a poor credit history were granted homeloans only to struggle with repayments later on.

Nevada had the highest foreclosure rate in March, with one in every 139 households in foreclosure, almost four times the national rate. California was next, with one in every 204 properties, followed by Florida, with one in every 282 households.

The three states reported some of the biggest house price rises in recent years, and also tend to also be plagued by defaults on unoccupied homes bought by speculative investors.

In many cases, home prices have now fallen below the size of the mortgages and some owners are walking away.

Wachovia, America's fourth largest bank, yesterday blamed a jump in foreclosures in California and Florida for a $2.8 billion writedown on its mortgage book in the first quarter. The writedown gave Wachovia a surprise loss, of $393 million, for the period.

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