NEW YORK (MainStreet) —A total of 831,574 U.S. properties either owned by banks or in some stage of foreclosure were sold to third parties in 2010, according to RealtyTrac, a firm that monitors the market.

This number represents a 31% decrease in foreclosure sale volume from 2009 and a 14% drop from 2008.

Rick Sharga, RealtyTrac’s senior vice president, said the decline was predictable, considering total home sales had declined last year.

“Home sales in general were down,” Sharga said, adding that the foreclosure filing freeze kept some distressed properties from entering the market.

In total, foreclosure homes accounted for nearly 26% of all U.S. residential sales during 2010, a number Sharga says has remained stagnant for the past few years. However, it’s the decrease in the number of properties sold that could pose a problem.  

“The volume would have to go back up to indicate recovery,” Sharga said. Instead, “we are continuing to build up a distressed property inventory that the market can’t absorb.”

Sharga’s analysis echoes RealtyTrac data released earlier this month that found foreclosure filings had only increased 1% in January. The housing market, Sharga said, can’t recover until foreclosed properties are off the market because they drive home prices down. The number of non-foreclosure property sales in 2010 decreased by nearly 19% from 2009, and nearly 27% from 2008.

RealtyTrac’s latest report also found that the average sales price of foreclosure properties was 28% below the average sale price of properties not in the foreclosure process, up from a 27% average discount in 2009 and a 22% average discount in 2008.

“[Foreclosure properties] continue to sell at an average sales price that is significantly below the average sales price of properties not in foreclosure,” James J. Saccacio, CEO of RealtyTrac, said in a statement. “The catch-22 for 2011 is that while accelerating foreclosure sales will help clear the oversupply of distressed properties and return balance to the market in the long run, in the short-term, a high percentage of foreclosure sales will continue to weigh down home prices.”

State by state, Nevada has the highest percentage of foreclosure sales with 57% of all properties sold in 2010 being in some stage of foreclosure. It’s followed by Arizona, where foreclosure properties accounted for 49% of all sales, and then California, where foreclosure properties accounted for 44% of all sales.

Other states where foreclosure sales accounted for at least one-quarter of all sales in 2010 were Colorado, Florida, Georgia, Idaho, Illinois, Michigan, Oregon and Virginia

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