Joel Jordan is doing what he can to help the economy -- and the housing market. After looking at about 40 houses -- most of them foreclosures and fixer-uppers that were unappealing to a busy guy who has never owned a home before -- he fell in love with a three-bedroom split-level house on a big lot in Stillwater that was too rich for his budget. A week later, he was pleasantly surprised when the sellers dropped the price by nearly $30,000.

"It wasn't like I was forced to buy; I just think the timing was right and I could get a good deal," said Jordan, whose deal closed at the end of last month. "And I didn't have a house to sell, so it was perfect for me."

Despite an almost daily dose of dim economic news, but driven by bargain hunters and first-time buyers such as Jordan, the housing market in the Twin Cities metro area is gaining some momentum.

Pending home sales in the Twin Cities area during October rose 6.9 percent from a year ago -- the fourth consecutive month of year-over-year increases. Closed home sales for the year are still almost 5 percent behind last year, but they rose 12 percent in October.

But those gains come with a dark side: A growing share of those home sales were distressed sales that help drive down the median sale price of homes sold during October by 18.2 percent.

Those prices are now approaching levels not seen since near the beginning of the decade, but much of the losses are being taken by homeowners who are forced to sell because they no longer can pay their mortgages.

Many are short sales

Lender-mediated sales -- including foreclosures and short sales, in which a lender agrees to a sale for less than what is owed on the mortgage -- represented 49 percent of all sales last month. The median price of those sales fell to $146,000, a 17 percent decline compared with last year. The median sale price in October of homes not in financial distress was down only 1.4 percent, an indication that many sellers who don't have to sell aren't necessarily offering fire-sale prices.

That's why Laurie Berg was disappointed when she and her husband sold their house in May for less than they had hoped in anticipation of making up for the loss by getting a good deal on the buy side. The foreclosures they looked at were in dismal shape and needed more work than they were willing to do, so they looked at only traditional properties and were disappointed that sellers weren't offering better deals.

"Sellers weren't flexible with pricing," Berg said. "A lot of sellers are in denial about how the market is supposed to be; we were struggling to find that bargain."

Some sellers standing firm

They made offers on four houses, but the sellers weren't willing to drop their prices enough, she said, so they bought a new house in Maple Grove from a builder who was offering a low-interest-rate financing package, but not much in the way of price breaks.

Louie Austin of Austin Real Estate Services in south Minneapolis said that such unwillingness to offer steep discounts is also prevalent in certain Minneapolis neighborhoods where foreclosure rates are lower and prices have held fairly steady despite high inventory levels. In St. Louis Park, he and a group of other agents are hosting a mass open house this weekend in an area where there are 15 houses for sale in close proximity to one another.

"A lot of people are thinking that it's doom and gloom out there, and it's really not," he said.

Still, foreclosure sales are expected to continue rising. A report to be issued today by RealtyTrac says that foreclosure-related filings during October were up 5 percent from September and up 25 percent compared with last year at this time.

Rob Reinke, a real estate agent with Re/Max Advantage Plus who specializes in distress sales, said declining sale prices only make the situation worse for people who are trying to sell, but can't because prices keep falling. He has six short-sale listings, half of which were bought by investors who can't keep up on their payments or who can't sell for what they owe on the mortgage. "They're bringing the price of all properties down," he said.

The Associated Press contributed to this report. Jim Buchta • 612-673-7376