The news comes as the US Department of Housing and Urban Development (HUD) announced it is to give $50 million to state and local governments to help address the inventory of foreclosed properties.
The monthly figures from the National Association of Realtors show that distressed sales, including short sales and foreclosures, accounted for 31% of total sales in July and June, down only slightly from 33% in May.
In July, some 20% of all sales were foreclosures and 11% were short sales, a NAR spokesperson said. It is an indication that the foreclosure problem is not going away and there are concerns that banks and other lenders may be preparing to try to off-load distressed properties that they have been holding onto before the end of the year.
HUD is to give $44.5 million to nine national organizations and $5.5 million to local communities for the purpose of purchasing, rehabilitating and reselling foreclosed properties in hard-hit areas.
However there is good news on the sale of new properties, the HUD also revealed. The volume of new single-family houses sold in July increased 9.6% above June's rate.
Also excess inventory is declining. The unsold inventory at the end of July came in at an estimated 271,000 units, a 7.5-month supply at the current sales rate. Excess inventory has continued to decline all year, from 12.4 months of supply at January's sales rate, to 8.5 months of supply at the end of June.
Rebecca Blank, US Commerce Under Secretary for Economic Affairs said that July's 9.6% increase from June was much higher than an expected 1.6%.
'These new numbers are another sign that we have put the brakes on the worst economic downturn in generations,' Blank said.