Sales of distressed homes nationwide fell in the first quarter as demand remained weak, but they still made up about 28 percent of total sales, the highest amount in a year, a RealtyTrac report said on Thursday.

Sales of homes owned by banks or in some stage of foreclosure totaled 158,434, down 35.8 percent from the first quarter of 2010 and 16.5 percent from the fourth quarter.

Of that total, 107,143 were bank-owned sales and 51,291 were in default or scheduled for auction.

Distressed sales accounted for 27.5 percent of all residential sales, ticking up from 27 percent in the fourth quarter of last year, the report said. It was the highest percentage of sales since the first quarter of 2010.

A fragile economic recovery, high unemployment and tight loan conditions have kept demand far below the large amount of homes available on the market. The glut of inventory — and more is coming with fresh foreclosures — is one of the biggest challenges for the housing market.

"With the amount of inventory we have left, it tells me in the best-case scenario we’re probably looking at 2014 before we start to see home price appreciation on a national basis," said Rick Sharga, senior vice president at RealtyTrac. (Reuters)