Vacation home sales rose in 2013, while investment purchases fell below the higher levels seen in previous years, according to the National Association of Realtors (NAR). NAR’s 2014 Investment and Vacation Home Buyers Survey found vacation-home sales jumped 29.7 percent to an estimated 717,000.

Investment-home sales fell 8.5 percent to an estimated 1.1 million in 2013, down from 1.21 million in 2012.

NAR Chief Economist Lawrence Yun expected an improvement in the vacation home market. "Growth in the equity markets has greatly benefited high net-worth households, thereby providing the wherewithal and confidence to purchase recreational property," he said. "However, vacation-home sales are still about one-third below the peak activity seen in 2006.”

Vacation-home sales accounted for 13 percent of all transactions last year, their highest share of sales since 2006. Investment sales fell 20 percent in 2013 from 24 percent in 2012.

Yun said the retreat in investment activity is understandable. "Investment buyers slowed their purchasing in 2013 because prices were rising quickly along with a declining availability of discounted foreclosures over the course of the year," he said.

Yun commented that home prices had sharply over corrected in 2011 and 2012, leading many investors to purchase homes cheaply to turn into rental properties. As market conditions return to normal, investors must now evaluate their purchases more carefully—and judiciously.

The report by NAR found, "The median investment-home price was $130,000 in 2013, up 13.0 percent from $115,000 in 2012, while the median vacation-home price was $168,700, up 12.5 percent from $150,000 in 2012."

All-cash purchases remained sizable in the investment- and vacation-home market: 46 percent of investment buyers paid cash in 2013, as well as 38 percent of vacation-home buyers.

Foreclosures also served as a verdant market for investors. 47 percent of investment homes purchased in 2013 were distressed homes. 42 percent of vacation homes were distressed homes.