The two groups representing real estate agents in the Twin Cities on Friday said they expect home prices will improve by 8 to 12 percent in 2013.
The Minneapolis Area Association of Realtors and the St. Paul Area Association of Realtors released their annual predictions during a news conference at a condo building in Minneapolis, where developers have sold 99 percent of the units.
"We are very encouraged by the recovery," said Andy Fazendin, president of the Minneapolis Area Association of Realtors.
In 2012, about 48,641 homes sold, which was the highest number since 2006. The groups expect closed sales to increase by 4 to 8 percent in 2013.
Even as foreclosures and short-sales made up for a smaller part of the market in 2012, Fazendin said challenges remained.
"Right now the frustration on the market are buyers who can't find homes to buy," he said. "Low inventory is really creating a market where buyers are frustrated, sellers are still not totally confident, they're getting more confident but they're still not totally confident in listing their houses. Hopefully what we're going to see this year is it's going to kind of flip over and we'll see an increase in inventory so those buyers can be satisfied."
Compared to 2011, the median sales price was up by about 12 percent in 2012 to $167,900.
Also Friday, the groups released December housing market numbers. The median sales price was $182,000 in December, which was up 14 percent over December of 2011.
The number of homes that sold was up 8 percent over the previous year, and foreclosures and short-sales made up less of the market.
Kate Beckman, president of the St. Paul Area Association of Realtors, said December also brought encouraging signs for the new year.
"What we did see and what the numbers maybe don't show was just kind of a pent-up excitement among our agents that there are listings that they are getting prepped to hit the market in January and February," Beckman said. "We're really excited about that. We saw full parking lots in our offices."