After a shocking 40% plunge in U.S. homesales during 2007, statistics are now showing a 7% rise in sales for 2008 largely driven by the sale of foreclosed homes.

These "Motivated Sales" or foreclosed/distressed houses sold at the auction block or by financial institutions increased by an astounding 177% last year while all other home sales fell another 17%.

The sale of these distressed assets represented as much as a third of all sales activity in the United States during 2008.

Not surprisingly, the biggest sales gains were in areas with the largest annual price declines: California, Nevada, Arizona and Florida. In California especially, these sales accounted for 47% of total sales in December, up from 23 percent a year earlier.

Obama's $275 billion home stability program should provide some support during the worst housing market downturn since the Great Depression, though it is extremely unlikely a turnaround will be swift. The home stability program aims to reduce the rate of new foreclosures and also reduce current mortgage rates for those who cannot afford them.

Still there are three major issues preventing any sort of housing recovery: the growing oversupply of unsold homes, a credit crunch resulting in increasingly restrictive access to mortgage credit and non-distressed home sellers asked to slash their asking prices.

As access to financed mortgage money remains limited, lenders are being battered by record foreclosure rates and house prices are unlikely to rise before the supply imbalance improves.