The number of U.S. households behind on their mortgage payments fell during the fourth quarter to the lowest level in two years, buoyed by improving labor market conditions.

The share of loans where the borrower had missed at least one payment dropped to 8.2% on a seasonally adjusted basis, representing about 4.3 million households and the lowest level since the end of 2008, according to the Mortgage Bankers Association quarterly survey released Thursday.

The number of loans where the borrower had missed just one payment fell to the lowest level since the end of 2007.

But the number of loans in foreclosure remained at its highest level since the start of the mortgage crisis, in part because banks slowed their foreclosure processes late last year to fix document-handling problems that surfaced in September.

While the number of loans entering foreclosure fell, "loans were not exiting the foreclosure process," said Michael Fratantoni, an MBA economist. The result was an increase in the total inventory of loans in foreclosure.