U.S. home buyers are less willing to buy foreclosed properties than they were six months ago, citing risks like hidden costs, but demand could grow because of the government's expanded tax credit, a survey showed yesterday.


A continued drop in demand for the glut of foreclosed properties would add a fresh layer of pain to a housing market just emerging from a three-year nosedive.


The percentage of Americans at least somewhat likely to consider buying a foreclosed home fell to 43 percent in November, sharply below May’s 55 percent, according to a survey by Harris Interactive.


The survey was conducted on behalf of Trulia.com, and RealtyTrac, which tracks foreclosures. Buyer expectations are becoming more realistic, Trulia Chief Executive Pete Flint said.


Next year “government interventions will start to disappear, shadow inventory will hit the market and mortgage rates will start to rise” to around 6 percent from under 5 percent, he said. “We’re in a false state of stability.”

Some prices have toppled by about 30 percent on average from 2006 peaks. Although prices are rising in some areas, the survey found lingering concern about buying now, when prices could fall further.