After earning a bad name for themselves for their role in inflating home prices during the boom, investors are now doing their part in the post-bust cleanup, according to existing-home sales numbers released today by the National Association of Realtors.

Existing-home sales rose to a seasonally adjusted annual rate of 5.1 million units in March, a 3.7% increase, which appears to be driven by investors snatching up distressed properties. While first-time home buyers accounted for 33% of the market in March, from 34% in February; and current homeowner buyers fell to 45% from 47%, investors took up the slack, growing to 22% of sales in March from 19% the month before. All-cash sales hit a record 35% of market share, and inventory dipped down by a tenth to an 8.4-month supply.

While it may cause some concern that so much of the buyer market is made up of investors, Peter Dennehy, vice president at John Burns Real Estate Consulting, points out that all buyers can be considered investors of some kind, and the kind in the market today are a boon.

Dennehy breaks home buyers into three groups: short term investors, who want to flip a home within three to six months of purchasing; long-term investors who plan to rent the home out and typically want to sell within three to five years; and the typical home buyer, who may take longer to list a home, but will likely sell it eventually.

Dennehy says most of the investors on the market today fall into this second, long-term category and are doing the market a service by bringing inventory levels down and helping prices to stabilize. Indeed, the median existing home price among all housing types bumped up to $159,600 in March, compared to $156,100 in February.

"For the housing market to be healthy, you need less inventory and stabilization of prices. If it’s investors that are doing that, that’s not a bad thing," Dennehy told Builder in an interview.

Patrick Newport, U.S. economist at IHS Global Insight agrees. "Without investors, demand would be even weaker than it is now, and the housing glut would be larger. So they are helping keep house prices from dropping," he told Builder in an email.

Newport also points to signs of life in the non-investor segment, citing the Mortgage Banker’s Association’s Purchases Index, which indicates that applications for mortgages to buy homes have gone up 10% over a seven-week period. "This pickup in demand should show up in improved existing-home sales in April and May, unless lending conditions tighten," Newport wrote in a press release.

Claire Easley is senior editor, online, at Builder.

Learn more about markets featured in this article: Greenville, SC.