Foreclosed homes made up a slightly smaller proportion of total U.S. home sales in April, May, and June.

RealtyTrac, a business research group, says foreclosed homes made up 31 percent of all U.S. residential sales in the second quarter of 2011. While that is a substantial proportion, it is down more than 5 percentage points from the first quarter.

The study's authors say banks are making progress is untangling paperwork errors that had been stalling the process of selling homes that were in default.

One effect of the global financial crisis has been a surge in the number of people who can not repay their home loans, leading banks to seize the property. Lenders then sell the properties in the hope of recovering the money they loaned to the homeowner who defaulted.

But the flood of foreclosed homes on the market is giving prospective buyers lots of choices and allowing them to offer lower prices for homes. Foreclosed homes have been selling for nearly one-third less than other houses.