The continued increase in lender foreclosure properties, possibly including a number of tax foreclosure properties, has increased home sales nationwide by seven percent in 2008, according to a foreclosure sales research by Radar Logic. Home buyers were enticed by bargain home prices and low mortgage loan rates.

While conventional real estate sales decreased by 17 percent in 2008, sales of foreclosed properties at auctions increased by 177 percent. It is not known if sales of tax foreclosure properties are included in the data. Michael Feder, head of Radar Logic, said sales of foreclosed properties, sometimes known as motivated sales or distressed transactions, accounted for about one third of all real estate sales in 2008.

In all the top 25 metro areas, home prices decreased, pulling down Radar Logic's composite index to 22 percent in 2008. In states with the highest foreclosure rates, Nevada, California, Arizona and Florida, home prices had the largest declines, making them the states with the largest home sales gains. Sales of lender foreclosure properties, possibly including tax foreclosure properties, in California, accounted for forty-seven percent of total home sales in the U.S. in December 2008.

The other factor pushing homes sales up are low mortgage rates. The 5.1 percent rate for a 30-year mortgage loan in December 2008 was Freddie Mac's lowest since it started recording rates in 1971.

Since 2006, the housing sector has been overwhelmed by unsold houses, including lender and tax foreclosure properties and unsold newly-built homes. Feder is pleased that the price level attractive to buyers has been reached in some areas. A slight increase in home sales is a positive development in a market devastated by lender foreclosure properties, and possibly tax foreclosure properties.

Feder asserts that there are three major issues that must be addressed before the housing market stabilizes: the surplus of unsold homes, the refusal of mortgage firms to grant higher loan amounts and the hesitation of non-distressed house sellers to reduce their asking prices. Mortgage lenders should be motivated to offer loans equal to about 85 percent of home values.

Finally, according to Feder, if President Obama's stimulus program addresses the three major issues, signs of recovery will begin to appear in the housing market. Market recovery will also mitigate factors that lead to tax foreclosure properties.