US home foreclosures up by 48 percent in May

According to the foreclosure-monitoring company, RealtyTrac, US foreclosure filings have continued to rise in May, indicating a 48% rise from a year ago. This means that one in every 483 households received a foreclosure filing last month.

That is highest rate since the Irvine, a report back in January 2005, and represents the 29th consecutive month of increased filings.

The increased number of foreclosures creates a further problem as they add to inventory and mean that regular sales are stalled causing instability in the property market. In addition, stagnation of properties in harder to sell areas are increasing defaults as currently, foreclosures account for 30 percent of national home sales this year.

It is estimated that foreclosed properties sell for about 20 percent less than other homes, and this in turn reduces the national selling price by around 6 percent, which will further reduce the low confidence in the market.

Lenders took possession of 73,794 houses in May, more than double of May 2007, and the current trend is that lenders are afraid to lend and buyers are afraid to take the plunge on property due to a turbulent market so there seems to be a catch 22 situation.

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