U.S home foreclosures grew by 7% percent in May and increased by 48% annually, according to a report released by RealtyTrac. That is the highest rate since the firm began tracking foreclosures in 2005.

There were 261,255 foreclosure filings in May as one in every 483 U.S. households received a foreclosure notice during the month.

"May was the third straight month where we've seen a month-to-month increase in foreclosure activity and the 29th straight month we've seen a year-over-year increase," said James J. Saccacio, chief executive officer of RealtyTrac.

According to the report, bank repossessions continued to climb, posting double-digit percentage increases from the previous month with more than twice the number reported in May 2007. This has swelled bank inventories to 700,000 homes.

Nevada led the pack with the highest monthly foreclosure rate. There were 9,009 foreclosure filings in May, a 24% increase from the previous month and a 72% year-over-year increase, the report said.

California foreclosures grew by 11% from the previous month, and 81% year-over year. California reported the highest amount of foreclosure filings with 71,390 homes.

Arizona's foreclosure rate ranked third overall as one in every 201 homes received a foreclosure filing. Arizona's foreclosure activity grew by 12% from the previous month, a 119% increase from May 2007.

The RealtyTrac Monthly U.S. Foreclosure Market Report compiles the total amount of properties with at least one foreclosure filing reported during the month. The RealtyTrac report includes properties filed in all three stages of foreclosure; default, auction and bank repossessions.

By Steve Stecyk and edited by Stephen Huebl