Sales were up, inventory was down and prices fell only slightly from a year earlier.
The 2012 housing market got off to a strong start, with a healthy gain in sales and only a moderate decline in prices.
There were 2,417 sales in the Twin Cities metro area in January, up 12.4 percent from the same month last year, according to the Minneapolis Area Association of Realtors. The median price of those sales was $140,000, down 3.4 percent from 2011. Strong demand for homes caused overall inventory levels to fall 28.1 percent last month.
"Price declines are subsiding, partly thanks to changes on the supply side of the equation," said Andy Fazendin, the association's president-elect. "We firmly believe that what we're seeing now is setting the stage for better times ahead."
January is typically one of the slowest months of the year, but strong demand for starter homes and inexpensive investment properties helped boost results. Sales of traditional listings were up 28.7 percent, while foreclosures sales increased 1.9 percent. Pending sales jumped 25.5 percent.
Brian Call, president of Rubicon Mortgage Advisors, said January was a tremendous month for his company. He closed more loans for home purchases last month than he did for all purchases, refinancings and investment transactions during January 2011.
"It was a great month and start to the year," he said.
Sensing a better market, the company has expanded into the Fargo area and is exploring the Brainerd Lakes region. "This does not feel like a typical first quarter," Call said. "And we see the growth as both consistent and sustainable."
But low inventory continues to be a problem for the market. Many traditional buyers don't want pour money into a fixer-upper. They're also competing with investors who can easily snap up low-priced homes with cash.
Agents are struggling, too.
"I'm having a hard time finding houses that my clients want to buy," said Krista Wolter, a sales agent with Coldwell Banker Burnet.
Indeed, home supplies continued to fall, dropping to the lowest level in at least eight years. During January, only 5,112 new listings came on the market, a 9 percent decline from last year. That caused the overall number of homes on the market to fall 28.1 percent to 16,463 listings -- the smallest number of houses on the market since 2003.
Coupled with an increase in sales, shrinking inventory means buyers have fewer options. At the current sales pace, there are enough houses to last only 4.6 months. Agents consider the market to be in balance when there is a six- to seven-month supply. Despite strong demand for short sales and foreclosures, those distressed sales still represented 42 percent of all listings last month.
Jim Buchta • 612-673-7376