NEW YORK (CNNMoney) -- Home prices are down but sales are up, somewhat contradictory trends.
Home prices fell nearly 6% during the six months ended Dec. 31, sending values to their lowest levels in the post-bubble period, S&P/Case-Shiller reported on Tuesday. On Wednesday, the National Association of Realtors reported that sales of existing homes rose for the third straight month.
"At least it's not a double whammy where both sales and prices are dropping," said Stuart Hoffman, chief economist for PNC Financial Services Group. "Deals are getting done."
That's because 26% of all homes sold last year were foreclosures and short sales, according to a RealtyTrac report released on Thursday. That's down slightly from 2009, but a jump compared to 2008.
Homes already foreclosed on and repossessed by banks, called REOs (real estate owned), sold for an average of 36% less than normal sales, RealtyTrac reported. Meanwhile, the discount for homes sold while they were still in the foreclosure process (short sales) was 15%.
"It's like the post-holiday sales at Macy's where they're trying to clear out unwanted inventory," said Anthony Sanders, a real estate professor at George Mason University.
Nevada had the highest percentage of distressed sales of any state at 57%. That was, however, less than 2009, when 67% of sales there were foreclosures. In Arizona, 49% of sales were distressed properties; in California, 44%; and in Florida, 36%.
Foreclosed properties sold for the biggest discount -- 50% off -- in New Jersey.
These homes have attracted bargain hunters, including individuals or groups looking to buy and hold properties, according to Hoffman. They hope to buy at such a good price that they can rent out the properties and make a profit.
"These folks are cash investors who are going in and offering very low bids," he said.
NAR reported that all-cash sales went up to 32% of the total, up from 26% a year earlier. It estimated the percentage of investor purchases hit 23%, up from 17% a year ago.
"Unprecedented levels of all-cash purchases -- primarily of distressed homes sold at deep discounts -- undoubtedly pulls the median price downward," said NAR president, Ron Phipps.
These investment opportunities are not going away. Nearly 30% of mortgage borrowers are underwater on their loans, owing more than their homes are worth, according to Stan Humphries, chief economist for Zillow, the real estate web site.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.99%||4.00%|
|15 yr fixed||3.06%||3.10%|
|30 yr refi||3.99%||4.08%|
|15 yr refi||3.07%||3.18%|
Today's featured rates: