Idaho saw the biggest drop in real estate prices nationwide, according to a report by Bloomberg, a national business news service.
The price of homes in Idaho dropped 16 percent compared to this time last year, according to the report.
That means a home priced at $200,000 fell to $168,000 on average.
Prices in Arizona fell 13 percent, and home prices in Oregon dropped 10 percent over the same period according to the report.
The nationwide drop in home prices was the largest since the third quarter of 2009, according to the Federal Housing Finance Agency.
The sale of foreclosed homes accounted for 37 percent of transactions in January, 2011, according to the Bloomberg report, and up to 36 percent of December's transactions.
Foreclosures drive down prices because lenders don't want to hold onto houses, getting rid of them as fast as they can, according to IHS Global Insight, an economy watchdog.
North Dakota had the biggest price gain, at 5.1 percent, according to the report. And house prices in Alaska jumped 2.6 percent.
Almost a third of the existing home sales in January were bought with cash, according to a National Associations of Realtors report. That was the highest cash-sale share since 2008.
The percentage of homes in foreclosure climbed to 4.63 percent in the last quarter of 2010. Homes in foreclosure sold at a 28 percent discount compared to properties that were not in distress.
The inventory of U.S. homes for sale rose to a record in mid-2010 as buyers waited for better deals, according to the Bloomberg report.
About one in four mortgaged U.S. homes is underwater, meaning their mortgage balances exceed current value, according to the report.
The U.S. median home price was $169,800 in the fourth quarter, according to the National Association of Realtors.
- Ralph Bartholdt