The Twin Cities housing market continued its steady march toward recovery in September, as homes sold faster and closer to asking prices than last year.
In September, 3,897 homes were sold, a 4.3 percent increase over the same period of 2011, according to a survey released Wednesday by the Minneapolis Area Association of Realtors (MAAR). Pending sales rose 11 percent to 4,032 in the 13-county metro area.
"This has been a trend since the beginning of the year," said Cari Linn, MAAR president. "I think everyone believes we've not only hit bottom, but that we're now trending up. It's not as fast an ascent as we'd like, but it's there."
September marks the 15th consecutive month of year-over-year sales gains. Twin Cities area home values also saw a healthy bump in September, with the median sale price up 12.3 percent from last year to $174,000.
The association's survey reinforces what other real estate experts have seen in the local market and nationally. Walter Maloney, spokesperson for the National Association of Realtors, said that the most-recent national surveys all suggest that prices have stabilized and will continue to climb in many markets -- including the Twin Cities.
"We're getting back to more normal market conditions, particularly next year as we clean out this distressed inventory," he said.
The MAAR survey found that 30.6 percent of all new listings in September were either foreclosures or short sales, the lowest level since June 2008. The percentage of all closed sales in the distressed category was 35.3 percent.
"One of the most encouraging changes in the market has been more traditional homes and fewer foreclosures," Linn said.
With interest rates in the Twin Cities hovering at around 3.4 percent, "buyers have a justified sense of urgency," said Andy Fazendin, MAAR president-elect.
Distressed properties tended to sell at a 26.6 percent discount compared with the overall market. While traditional median home prices were up 6.2 percent to $207,000, foreclosure prices were up 13.7 percent to $125,000 and short-sale prices were up 0.8 percent to $131,000.
But the inventory of homes for sale continues to be constrained in the metro area.
The number of homes for sale has dropped for 20 consecutive months and is below 16,000 for the first time since December 2003. This indicates that the market may be on the brink of favoring sellers.
Yet, "The only missing component was seller confidence," the MAAR report states. Sellers brought 5,341 properties to the market, a decline of 4.1 percent. The number of homes for sale on the market fell 29.4 percent to 15,996 -- close to a nine-year low.
On the broader economic front, the report says consumer confidence may also hinge on the uncertainty surrounding the upcoming presidential election, a continued sluggish job market, persistently high gas prices, drought-induced spikes in food prices and continued unease abroad.
Staff writer Jim Buchta contributed to this report. Janet Moore • 612-673-7752