According to the Warren Group, a Boston-based real estate data firm, foreclosure activity in Massachusetts dropped year-over-year in May, which marked the fewest number of deeds recorded in any month so far this year.

Foreclosure deeds, which represent completed foreclosures, decreased almost 65 percent to 454 in May from 1,294 in May 2010.

Foreclosure petitions, which mark the first step in the foreclosure process, dropped almost 67 percent year-over-year to 699 from 2,110 in May 2010.

“Delayed foreclosures are masking the reality of the market,” said Vincent Valvo, group publisher and editor-in-chief of the Warren Group’s Banker & Tradesman magazine. “Lenders are continuing to be cautious with the legal process, which is causing a drop off in foreclosure starts and deeds.”

Both deeds and petitions also fell from a month earlier. May was the first month this year deeds dropped below 500.

The number of advertised auction notices likewise declined in May. There were 1,832 auction announcements in May, down 36 percent from 2,860 a year ago. Year-to-date auction notices decreased 53 percent to 6,507 from 13,974 over the same period last year.