For many months now, the federal government has been exploring all sorts of solution in order to curb the enduring foreclosure crisis. Thus, it came as a surprise when home sale activity improved in states, which are considered to be the epicenter of the housing industry mess.

Some experts and analysts have actually been expecting such improved home sale activity. For them, it was simply a matter of time until bargain hunters come out of the woodwork and start buying real estate properties.

It also helps that mortgage interest rates are at an all-time low. This will certainly lure buyers back into the game. Market conditions have also improved for buyers especially with the tightened lending guidelines that will ensure borrowers fair underwriting.

According to UCLA Anderson forecast, it is possible that the housing crisis is composed of three phases. The first phase started in 2005 when default started pouring in and home prices began declining. The second stage occurred in 2007 where there was a dramatic increase in national foreclosure rate, ending in over two million homes entering some stage of foreclosure. Finally, the last stage will most likely start when home sale activity picks up even if home prices are still considered weak.

Considering this, the current situation in the housing industry can be placed somewhere in between phase 2 and phase 3. This means that it is still too early to announce a market recovery. Most of the adjustable rate mortgages taken out two years ago have also re-set and with only a small percentage left, analysts are looking forward to a foreclosure rate decline by the end of 2008 or early 2009.

Such good news is indeed welcome especially when foreclosure rate nationwide continues to rise. Last month, the number of foreclosure filings has increased by almost 50 percent from 2007.

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