Foreclosure-related sales rose in the last quarter of 2011 but fell slightly year-over-year, according to RealtyTrac's latest U.S. foreclosure sales report.

During the three months that ended December 31, homes that were either bank-owned or going through the foreclosure process accounted for 24% of all home sales, up from 20% in the previous quarter and down only slightly from a year earlier when foreclosures accounted for 26% of sales.

Brandon Moore, chief executive officer at RealtyTrac, believes the quarter-over-quarter number is a better indicator of what's to come:

"Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures. Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year. We expect to see foreclosure-related sales [to] increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months."

"We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter," Moore wrote in a press release Thursday. He expects the trend to continue through 2012, as lenders recognize short sales as a better option for delinquent loans.

The average sale price of bank-owned homes and homes in foreclosure was $164,944 in the fourth quarter of 2011, down 5 percent from the same time in 2010. That's 29 percent below the sale price of a non-foreclosure home sold during the same quarter.

Short sales on the rise

Short sales are starting to become the preferred method for banks to dispose of properties in default. In short sales, borrowers who owe more on their mortgages than their homes are worth agree with their bank to sell their homes at the lower market value. In return, the bank agrees to absorb the loss.

During the last quarter of 2011, there were more than 88,000 short sales, up 15% compared with a year earlier, according to RealtyTrac. Short sales comprised 10% of all homes sold during the quarter.

Meanwhile, sales of bank-owned homes fell 12% year-over-year to 116,000, comprising 13% of all sales during the quarter.

REOs

Sales of REO homes (bank-owned foreclosures) decreased nationally by 12 percent year-over-year, and accounted for 14 percent of all home sales in 2011.

REOs sold for an average of $149,686 in the fourth quarter, down 2 percent year-over-year and 36 percent below the average sale price of a non-foreclosure home.

After completing the foreclosure process, REOs had an average market time of 175 days in the fourth quarter of 2011.