2009 will go down in the history books as the year that the local housing market took large healing steps towards balance, according to special new year-end analysis from the three Twin Cities area Realtor associations.

In the Twin Cities 13-county metro area, total pending sales for 2009 ended at 52,167, up 18.4 percent from 2008. That’s the highest number of units sold since 2005 and the strongest year-over-year increase in sales since 1998. Closed sales were a similar story, ending the year up 16.7 percent from last year.

Low mortgage rates, historic affordability, pent-up demand and the Federal First-Time Home Buyer Tax Credit all worked in concert to encourage the buying resurgence, said the analysis.

The Twin Cities Housing Affordability Index for the year was 202, a record high reflecting a more accessible market for buyers. Home sales below $150,000 jumped 72.0 percent from a year ago, as first-time buyers rushed to take advantage of the tax credit.

“A lot of folks took the plunge into home ownership this year for the first time,” said Jim Stanton, president of the North Metro Realtors Association. “That helped stabilize communities and absorbed some of the excess supply we had a year ago.”

The inventory of available homes has dropped significantly in the last year. At the start of 2010 there were 19,179 homes for sales in the metro area, down 22.3 percent from a year ago. Lender-mediated inventory, in particular, is disappearing quickly, dropping from 9,046 units at the peak in February to 5,695 units today. Within that lender-mediated category, foreclosures are selling through much faster than short sales.

“With job losses and mortgage delinquencies, foreclosure activity will continue to be significant in our market,” said Brad Fisher, president of the Minneapolis Area Association of Realtors. “But thankfully, a lot of vacant homes have been filled in the last year.”

With more lower-end properties being bought by first-time buyers and the continued presence of lender-mediated sales, median prices for the year were down, said the groups. The 2009 median sales price of $166,000 was a 14.9 percent decline from 2008. However, prices have substantially strengthened since the spring; the December median sales price was 3.0 percent down from a year ago.

Separating lender-mediated foreclosure and short sale properties from traditional homes paints a clearer picture. In 2009, the median sales price of lender-mediated properties was $124,000, a drop of 14.2 percent from 2008. The traditional median sales price was $204,000, a decline of 8.3 percent from last year. For the year, 43.0 percent of closed sales in the region were lender-mediated, up from 31.4 percent in 2008.

The number of new listings entering the market during 2009 decreased by 11.0 percent compared to one year ago, the lowest showing since 2003 and the third consecutive year of substantial decline. With the tax credit extended until April 30, 2010 and expanded to include a $6,500 credit for non-first-time home buyers, the early months of the year should see slightly stronger listing activity, said the study.

Some sellers will put their homes on the market and once sold, will buy a new home to take advantage of the expanded tax credit.

“The local economy and housing market still face some real challenges,” said Tony Maurer, president for the Saint Paul Area Association of Realtors. “But we’ve made a lot of progress and there’s legitimate reason for optimism as the year begins.”