Looking for a good deal on a modestly priced home? You might have some serious competition from deep-pocketed investors.

Institutional investors are accounting for an increasing share of residential home purchases, according to new figures from the real estate data firm RealtyTrac. Investors accounted for 14 percent of all residential purchases in September, up from 9 percent in August and the same figure in September 2012.

Investors appear to be scaling back their purchases and focusing more on mid-priced markets, making up roughly one-quarter of all purchases in such markets as St. Louis, Jacksonville (Fla.) and Atlanta. Meanwhile, investors accounted for only 2-3 percent of September purchases in such high-end metro areas as Washington, New York and San Francisco.

"The housing market continues to skew in favor of investors, particularly deep-pocketed institutional investors, and other buyers paying with cash," said Daren Blomquist, RealtyTrac vice president. "While the institutional investors are pulling back their purchases in many of the higher-priced markets, they are continuing to ramp up purchases in markets where median prices are still below $200,000."

Short sales a draw

One of the factors bringing investors into the market has been an increase in the share of distressed home sales out of the entire market. Distressed sales - both foreclosures and short sales - made up 25 percent of all home sales in September, up from 18 percent one year earlier.

All-cash purchases, favored by investors, made up an astonishing 49 percent of all residential purchases in September, up from 30 percent for the same month one year earlier and 40 percent in August.

The rise in investor purchases and distressed sales appear to be driven by homeowners motivated to seek short sales as lenders have pressed ahead to clear out a backlog of delinquent mortgages created by the housing crash nearly five years ago. Short sales currently outnumber foreclosure sales by a 3-to-2 margin, according to RealtyTrac.

"Distressed sales remain persistently high, particularly short sales," Blomquist said. "Markets with the biggest increases in short sales tend to be those where either foreclosure starts or scheduled foreclosure auctions have rebounded in the last 18 months - translating into more motivated short sellers - or those with a still-high percentage of underwater homeowners with negative equity."

RealtyTrac figures are based on recorded sales deeds and loan data. For survey purposes, institutional investors are defined as entities or persons that have purchased 10 or more residential properties in the past 12 months.