Eight years ago, Julie and Jon Bixby sold their house in Minneapolis and moved to Hugo, where they invested in a new four-bedroom house in an upscale development.

Now they want to sell to move closer to Mahtomedi, where their son attends school, but housing prices haven't rebounded enough to ensure they don't take a loss.

They would like to get at least $475,000 for the house they bought for $510,000 — and on which they spent another $100,000 in improvements.

"As soon as we don't have to write two checks when we close on a house, we would love to sell our home," said Julie Bixby, a corporate events planner. "My gut tells me two years. I think the market has shown there's no such thing as a crystal ball, that's for sure."

The Bixbys have plenty of company in Washington County, said Edina Realty agent Anne Anderson, as sellers from Forest Lake to Cottage Grove see hope in a market upswing that again has buyers clamoring for houses.

But until prices rise, allowing prospective sellers to pay off their current mortgages before shopping for other houses, the market won't be fully restored, she said.

Like many would-be sellers in Washington County, the Bixbys are playing a waiting game.

"All in all it's a busy market," said Anderson of Stillwater, who will represent the Bixbys when they're ready to sell. "Buyers are out there and they're looking. Talk to any real estate agent and they have buyers they can't find anything for."

Sales of existing houses are showing a revival because a four-year backlog of foreclosures and bank-owned properties is disappearing from the market, Anderson said. New listings usually are being shown to potential buyers right away, offers are coming in the first week or two, and more buyers will pay the listing price, she said.

New houses are selling too, according to an annual report compiled by the St. Paul Area Association of Realtors that measures housing activity in the 13-county metro region.

Washington County ranked second in the percentage of new houses constructed last year in the Twin Cities market, the report shows.

Of the county's 3,721 total closed sales — a 14 percent increase from 2011 — 10.1 percent were new houses. That was second only to Carver County, where new houses comprised 13.4 percent of total sales.

Construction of new houses fell sharply in the metro area after 2008, only beginning to level off in mid-2012. Ranking among the top cities in the metro last year for higher percentages of new houses were Bayport, Hugo, Stillwater and Woodbury.

"Some people have wanted to build new for a long time, and now the market is picking up," said Mike Rygh, owner of Custom One Homes, a Washington County builder. "People are starting to get going again. We're seeing it in every area we're building."

Across the metro, home sales posted an unprecedented 17 percent increase from 2011 to 2012, outpacing national sales, according to the Minneapolis Area Association of Realtors. Record low mortgage rates, declines in unemployment and growing consumer confidence fueled the increase, the association said.

The turnaround is especially apparent in Woodbury, the county's largest city, where housing starts have reached the highest level since 2007 and foreclosures dipped to 2006 levels. Woodbury now has the fourth-highest number of new houses in the metro and increased commercial activity for both new construction and additions/alterations with a total value of $23.3 million.

Several Washington County cities ranked high in total closed sales in 2012 compared with 2011. Lakeland, for example, had 26 sales representing a 100 percent increase. A neighboring city, Lakeland Shores, had a 50 percent increase in overall sales, while Marine on St. Croix had a 50 percent increase, Afton a 48 percent increase, Lake Elmo 38 percent, Cottage Grove 26.4 percent, Bayport 24.1 percent, Mahtomedi 20.2 percent, Stillwater 14.1 percent, Woodbury 11.8 percent and Hugo a 10.4 percent increase.

Cities seeing minor or no increases in total closed sales were Forest Lake, Grant, Oak Park Heights, Oakdale and St. Paul Park. Some cities saw declines in sales from 2011: Dellwood was down 21.4 percent, Lake St. Croix Beach was down 13.3 percent, Newport was down 6.1 percent, Pine Springs was down 20 percent and Willernie was down 18.2 percent.

Like most metro-area cities measured in the report, several Washington County cities saw a rebound in median housing prices in 2012. Prices in Forest Lake and Hugo jumped about 20 percent, for example, while Bayport saw a 25 percent increase and Woodbury a 9.2 percent increase.

Many sellers won't get the prices they want until home values rebound to match their expectations, Anderson said. "They're hearing optimism and hope it translates to more dollars for their house," she said. "Everyone that's bought in the last few years really needs to sit tight."

Bixby and her husband, both in their 30s, love the Victor Gardens neighborhood in Hugo. But they've waited longer than they expected to make the next move because of the low prices. Several of their friends have landed in the same situation, she said.

"There are people like us who would like to move," she said, and who feel enticed by record low interest rates. "It's just so frustrating — it's like dangling candy in front of a child. It's really, in my opinion, very risky."

Some Washington County sellers have dropped their prices substantially to find buyers. In Afton, a rural city along the St. Croix River, median prices last year fell 36 percent compared with 2011. Since 2008, housing prices in that city have declined 33.3 percent.

Of all Washington County cities, only Newport ranked among the metro-area cities having the greatest percentage of sales of "distressed" properties. By a different measurement, however, Newport had good news in 2012. Median housing prices rose 36.5 percent, from $72,175 in 2011 to $98,500 last year.

Kevin Giles • 651-925-5037