WASHINGTON -- Investors lifted U.S. home sales last month, plunking down cash to grab cheap homes at risk of foreclosure. But purchases made by first-time home buyers fell, a troubling sign for the weak housing market.

Sales of previously occupied homes rose in March to a seasonally adjusted annual rate of 5.1 million, the National Association of Realtors said Wednesday. That's a 3.7 percent increase from the February pace, but far below the 6 million homes a year that economists say represents a healthy market.

Foreclosures or short sales -- when the lender agrees to accept less than what is owed on the mortgage -- rose to make up 40 percent of all purchases, and deals paid for entirely in cash accounted for 35 percent of all resold homes.

Many of those purchases are being made by investors, who are targeting cheap properties in areas hit hardest by foreclosures, including Phoenix, Las Vegas and Tampa. The trade group's data takes into account only individual investors. It does not include homes sold in bulk at auction or on courthouse steps.

Many of the foreclosure sales are likely being picked up en masse by private equity firms.

Another sign of investor activity is that sales of homes priced under $100,000 have risen 10 percent from a year ago. In that same period, sales of mid-priced homes, between $100,000 and $500,000, have fallen more than 14 percent.

Sales among first-time home buyers, who typically set down roots and raise families, fell to 33 percent in March. The trade group said a healthier makeup is 40 percent.