While California awaits its massive share of the multistate settlement, home prices continue to fall as distressed sales rise to their highest level since early 2011.

The median price paid for a home in the state's San Francisco Bay Area fell from a year earlier for  the 16th consecutive month in January, according to DataQuick. Conversely, the area's home sales rose in January to the highest level in five years, boosted by lower prices, record-low mortgage rates and a record level of investor purchases.

In January, 5,479 new and resale houses and condos sold in the Bay Area, which consists of Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma. The total is up 10.3% from 4,966 a year earlier, but down 26.9% from 7,494 in December. The year-over-year sales increase was the seventh in a row.

The monthly drop was normal for a season in which, on average, sales have fallen 28% from December to January since 1988, when DataQuick began tracking the data. Last month’s sales were 10.5% below the average number of homes sold in January. Since 1988, January sales varied from 3,586 in 2008 to 8,298 in 2005.

The median price paid for all new and resale houses and condos sold in the Bay Area last month was $326,000, down 3.6% from $338,000 in January 2011 and 2.8% from $335,000 in December.

The median’s low point of the current real estate cycle was $290,000 in March 2009, while the peak was $665,000 in June/July 2007.

“While it’s clear prices have edged lower in some areas recently, last month’s Bay Area median of just $326,000 is a reflection of how skewed the market has become toward distressed, lower-cost properties,” DataQuick President John Walsh said. "The higher-end sales have slowed in recent months as many struggle to qualify for loans and others just sit tight."

It's unclear how the recent multistate pact with the five major banks will effect California's housing woes.

The state will reportedly receive nearly $18 billion of the $25 billion settlement to help underwater homeowners reduce their principal or perform a short sale. California Attorney General Kamala Harris said she expects roughly 250,000 homeowners in the state to get a write down over the next three years because of the deal. Another 140,000 could get the $2,000 restitution.

“We’ll be watching to see how the purchase market might be impacted by the government’s recently announced efforts to help homeowners refinance, or otherwise avoid foreclosure," Walsh said.

"(Harris) says there are ‘incentives’ to ensure much of that money is spent in hard-hit counties ‘within the first year'," he added. "What’s not clear is the extent to which these efforts will kick in during the first half of 2012, which could alter the course of some who are on the brink of foreclosure right now."

Last month distressed property sales — the combination of foreclosure resales and short sales — rose to 51.9% of the Bay Area resale market, according to DataQuick. That’s a decrease from 54.5% in January 2011 and an increase from 48.5% in December.

Foreclosure sales accounted for 28% of resales in January, down from 35% a year earlier and up from 27.8% in December. Short sales made up 23.9% of Bay Area resales in January, the highest for the current housing cycle. That figure was up from 19.5% from a year earlier and 20.7% in December.