Sales of existing homes in the Chicago area fell last month, and plunged dramatically within the city of Chicago, but consumers who did close transactions were able to buy a lot of house for their money.

The Illinois Association of Realtors said Wednesday that 3,844 single-family homes and condominiums were sold in January, a 2 percent drop from January 2010. Sales activity within the collar counties mitigated the anemic performance within the city of Chicago, and especially in the condo market.

The overall sales declines were expected, in part because of difficult comparisons with a year ago, when federal homebuyer tax credits spurred the market. The price declines show the effect that distressed sales continue to have on the broader market.

For the nine-county Chicago area, the median price of $158,000 was a 9.7 percent drop from January 2010.

Within the city of Chicago, condo sales fell 13.9 percent, to 564 units sold, and the median price of $239,000 was a 14.6 percent decline from a year ago. The median price of a single-family home fared better, rising 6.4 percent to $125,000, but sales during the month fell 14.1 percent to 470 homes sold.

How big of a factor were heavily discounted foreclosures and short sales in Chicago last month? Distressed properties accounted for 54 percent of all single-family transactions and 46 percent of all condo sales, according to the Chicago Association of Realtors.

While sales were down 7 percent in Cook County, sales rose in DuPage, DeKalb, Grundy, Kane and Lake counties.

“Sales declined by a very small amount in January year-over-year and would have been higher than 2010 had the effect of the homebuyer tax credit been removed,” said Geoffrey Hewings, director of University of Illinois’ Regional Economics Applications Laboratory. “Prices, however, are still being challenged by the volume of distressed properties on the market.”

One factor that might spur more consumers to consider home purchases was rising rents that are expected as demand for units rises and supply contracts, Hewings noted.

Separately, the Mortgage Bankers Association said Wednesday that applications for loans to refinance or purchase homes rose last week, largely because turmoil in the Middle East helped drive down interest rates. The average rate for a 30-year, fixed-rate mortgage with a 20 percent down payment last week was 5 percent, with .97 point, compared with 5.12 percent, with .85 point the previous week.

Applications for home purchases rose 5.1 percent, while refinancing applications increased 17.8 percent.