LOS ANGELES (AP) — Sales of bank-owned homes and those already on the foreclosure path fell sharply in the second quarter, reflecting a thinner slate of properties for sale in many cities as banks take a measured approach to placing homes on the market.

Even so, foreclosure sales' share of all U.S. home purchases grew in the April-to-June period, foreclosure listing firm RealtyTrac Inc. said Thursday.

The combination of fewer bank-owned homes for sale and stronger demand during the traditional spring home-buying season also pushed sale prices higher. Bank-owned homes and those in some stage of foreclosure posted the biggest annual increase in average sales price since 2006, before the housing bubble burst, the firm said.

"It boils down to supply and demand — limited supply and pretty strong demand — especially during the second quarter, when a lot of buyers come out of the woodwork and look to buy," said Daren Blomquist, a vice president at RealtyTrac.

As of last month, there were 1.47 million U.S. homes in some stage of the foreclosure process or owned by banks. Of the 620,751 in lenders' possession, only about 15 percent are listed for sale, according to RealtyTrac.

The measured approach has triggered bidding wars and led to higher prices in markets like Las Vegas, where the inventory of bank-owned homes sank to a 6.2-month supply in June.

The pool of foreclosed properties for sale also has declined because many pending foreclosure cases were put on hold last year while banks sorted through foreclosure abuse claims. A $25 billion settlement in February cleared the way for lenders to tackle that backlog of foreclosures, and the number of homes entering the foreclosure process has been rising.

Still, those properties, should they end up foreclosed, are not likely to hit the market until next year.

All those factors helped set the stage for the second-quarter decline in foreclosure sales, which includes bank-owned homes and homes in the foreclosure process, which are most commonly short sales, when the lender agrees to accept less than what the seller owed on the mortgage.

Lenders are increasingly favoring short sales versus waiting for troubled loans to go through the foreclosure process.

Short sales on properties that hadn't even started the foreclosure process rose 18 percent between January and May compared to the same stretch of 2011, the firm said.

"Selling a bank-owned property has become a lot less attractive to lenders than it was in the past, and it just opens them up to additional risk," Blomquist said.

All told, 224,429 homes in the foreclosure sales category were purchased in the second quarter. That's down 12 percent from the first three months of the year and down 22 percent from the second quarter last year, RealtyTrac said.

Despite the decline in foreclosure sales, their share of all home sales grew.

Foreclosure sales accounted for 23 percent of all U.S. home sales, which includes sales of previously occupied homes and new homes. That's up from 22 percent in the first quarter and up from 19 percent a year earlier, the firm said.

While rising, the share of foreclosure sales remains well below its first-quarter 2009 peak of 45 percent of all sales. They comprised less than 1 percent of all sales in 2005, at the height of the housing boom.

Homebuyers who purchased a foreclosure sale in the second quarter paid an average of $170,040. That's up 6 percent from the first three months of the year and up 7 percent from a year earlier.

While costing more, the average price of a foreclosure sale amounted to a 32 percent discount on the average price of non-foreclosure homes, RealtyTrac said. The discount rose from 30 percent in the first quarter and second quarter of 2011.

The wider price gap between foreclosure sales and those of non-foreclosure properties reflects rising home prices as sales have improved this year.

The Standard & Poor's/Case Shiller index for June showed the first year-over-year increase in home prices since September 2010.

Sales of new homes in the second quarter were up 18 percent from a year earlier. As of last month, they're up 25 percent from a year earlier. Sales of previously occupied homes rose nearly 9 percent in the April-to-June quarter. They jumped 10 percent in July compared with the same month last year.