"A Rose for Emily" by William Faulkner, and Shirley Jackson's, "The Lottery," can both be considered modern horror stories.
Dictionary.com defines horror as:
an overwhelming and painful feeling caused by something frightfully shocking, terrifying, or revolting
Both stories can be considered horror stories in that they both provide endings to their stories that are horrifying: revolting, shocking or both.
The concept of a modern horror story impresses me as something that is more psychological, and less a physical threat such as Frankenstein's monster: an evil that does not hide himself under the guise of civilized humanity. However, Faulkner and Jackson shock their audiences, as the plot takes the reader to an everyday event or a conservative home, to come suddenly out of hiding, shocking the reader's sensibilities, when the reader was totally unprepared—where one expects and depends upon civilized behaviors and rules that hold the monstrous in check.
In "A Rose for Emily," Miss Emily is a dignified and respected woman of the elite community in which she lives. She is, in some ways, more a man than woman, taking a man's freedom and wearing it publicly like a hat; one expects in the reading of the story that she is well-grounded, if a little eccentric. When it is obvious that the steel grey hair on the pillow next to the rotted corpse is her recent hair, the reader is stunned.
In "The Lottery," the reader is equally unprepared for the story's outcome. The town gathers together, chatting quietly on a lovely evening, waiting for what one might assume to be "festivities," to begin. Children run around, laughing and playing. It could be a night like any other. However, when it is clear that the lottery being conducted will decide who among the townspeople will be stoned to death, it is appalling and shocking.
The modern horror story is more "horrifying" because it has its roots in what could happen, as opposed to older horror stories that one would not take seriously, though they would still frighten the reader. In the modern version, this horror could be lurking in a neighbor's home, and perhaps it is this realization that makes these stories so much more unsettling, even frightening.