Local housing market recovery continues to roll forward in the Twin Cities 13-county metropolitan area. In September, more homes sold in less time at higher prices and for closer to asking price than last year. During the month, 4,032 homes went under contract, 11.0 percent higher than September 2011. The median sales price was up 12.3 percent to $174,000; the 10K Housing Value Index showed a more modest 6.8 percent increase to $172,208. The only missing component was seller confidence. Sellers brought 5,341 properties to the market, 4.1 percent fewer than last year. The number of homes for sale on the market fell 29.4 percent to 15,996—near a 9-year low – making seller conviction and optimism increasingly critical. 
“One of the most encouraging changes in the market has been more traditional homes and fewer foreclosures,” said Cari Linn, President of the Minneapolis Area Association of REALTORS®. “There’s finally some room to breathe for traditional sellers.”
At 30.6 percent for September 2012, the percentage of all new listings that were lender-mediated (either foreclosure or short sale) was at its lowest level since June 2008. The percentage of all lender-mediated closed sales was 35.3 percent.
These distressed sales tended to sell at a 26.6 percent discount compared to the overall market. Overall median sales price was up 12.3 percent, but prices varied by sale type. 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, their first gain since June 2008.
The number of homes for sale has dropped for 20 consecutive months and is below 16,000 for the first time since December 2003. Months’ supply of inventory fell 40.9 percent to 4.0 months. This indicates that the market is on the brink of favoring sellers. Figures below 4.0 months supply are moving toward a sellers’ market.
The landscape for sellers continues to brighten. On average, homes sold in 101 days, 28.7 percent faster than last year at this time. Sellers received, on average, 94.8 percent of their list price, 4.1 percent more than last year. Cash buyers made up 19.3 percent of all closed sales.
“Interest rates in the Twin Cities are around 3.4 percent and buyers have a justified sense of urgency,” said Andy Fazendin, MAAR President-Elect. “Housing has gone from a laggard the past few years to leading the charge in 2012.”