The rise in number of foreclosure sale notices filed in Arizona in May will again add large numbers of repossessed houses to housing inventories in the state.

The expected readjustment of adjustable-rate mortgage loans to their higher rates in the coming months and in the following years will also increase already large numbers of repossessed houses, according to an analysis of foreclosure and real estate records in Arizona.

In May, the number of foreclosure sale notices filed in the state reached 12,404, representing an increase of 26 percent from filings in May 2008 and an increase of 291 percent from filings in May 2007. Notices of foreclosure sale are documents issued by lenders to formally notify borrowers that the houses named in their mortgages are already scheduled to be sold in public auctions.

In the first months of the foreclosure crisis, homeowners who took out subprime loans comprised the majority of borrowers whose home became repossessed houses. In 2007 and in 2008, these types of borrowers were mostly in areas like Maricopa County.

In the first months of 2009, counties which previously had negligible foreclosure rates have been showing increasing rates of foreclosure filings. In Coconino County, the number of foreclosure notices increased in May by 175 percent compared to May 2008 and increased by 395 percent compared to May 2007.

When compared to its neighboring state of Nevada, Arizona is slightly better in terms of foreclosures, but the rising foreclosure pace in counties such as Pima, Yavapai, Navajo and Mohave has been making state and local officials concerned.

While the rise in number of repossessed houses in Arizona is beneficial to some sectors such as renters, investors and homebuyers, the rise in foreclosures has put many families in difficult situations.

One residential real estate business in Arizona said it has more than 95,000 units of homes for sale, with about half as tax sales and the other half consisting of repossessed houses and short-sale properties.

An example of a house for sale that illustrates how steeply home prices have gone down in Arizona is a Navajo house originally priced at $165,000 which is now listed at $129,000. Another is a Scottsdale condo originally priced at $210,000 which is now also listed at $129,000.

With the expected increase in number of repossessed houses, home prices will fall further, providing more opportunities for investors and new homebuyers. Housing analyst hope though that more homeowners are able to get help from the federal foreclosure prevention program.