business

Fewer homes are on the market in the Twin Cities, and more units sold in August, signs that the housing market may be stabilizing with less competition among sellers, new sales data show.

The 23,502 houses that were for sale in the Twin Cities in August represented a 21.4 percent drop from a year ago and the largest annual decline in nearly seven years, said the Minneapolis Area Association of Realtors, which compiles the monthly statistics for the metro area.

The report also showed a sharp increase in home purchases, up 46.4 percent, compared with a depressed period a year ago, after the home-buyers tax credits had expired.

Not all signs pointed to a recovery, however, and the industry group remained cautious about what lies ahead.

Despite a substantial drop in the percentage of homes sold that were foreclosures or short sales -- dwellings that typically sell at distressed prices -- the median home price in August was still down 10.9 percent from a year ago, to $156,000. Homes sold, on average, for just over 91 percent of their original list price, flat with a year ago.

"The fact that there were literally no jobs added [nationally] in August is fairly worrisome for many in our industry," said Cari Linn, the association's president-elect.

But the association said that the housing market is moving closer to a balance between supply and demand, usually defined as a five- to six-month backlog of homes for sale at any one time.

"There are currently 7.1 months supply of inventory, which is just outside of the ideal range," the association said. The backlog of houses for sale was down nearly 19 percent from a year ago, and marks the lowest inventory in 18 months.

Foreclosed or short sales made up 38 percent of all purchased homes, which the association said was the lowest level in 14 months. It also noted that slightly fewer financially distressed homes were newly listed than were sold.

Steve Alexander • 612-673-4553