The number of homes listed for sale in the Fredericksburg area last month hit its lowest point since the peak of the housing boom.

There were 1,399 homes actively listed in the local market at the end of December, down 25 percent from a year ago and the lowest total since June 2005.

That could be a sign that banks aren't putting foreclosed properties on the market, or that homeowners aren't willing to list their houses until prices rise.

But it's also a positive indicator that the huge excess of homes that were built locally during the housing boom are starting to get soaked up, a trend partly due to the extremely low levels of new home construction over the past few years. The dwindling supply of existing homes could bode well for long-suffering builders.

There were 316 homes sold last month through the Multiple Listing Service in the local market, up 6.4 percent year over year, according to data released yesterday by Metropolitan Regional Information Systems Inc. That includes Fredericksburg and Caroline, King George, Spotsylvania and Stafford counties. Detached homes made up about 85 percent of the total sales. About a quarter of the overall sales were foreclosures.

There was about a 4.4-month supply of homes available locally at the end of December, which is slightly below the level considered an optimal balance between supply and demand. There was an 8.7-month supply at the end of December 2010.

Almost all other local housing indicators also improved in December compared with a year ago. The median sales price of $215,000 was up about 9 percent, as was the total sales volume. The average sales price was about 7 percent below the original list price, compared with an 8 percent discount a year ago.

Though local inventory levels are now about where they were in June 2005, the market bears little resemblance to those days in any other way. For example:

The median sales price was about 36 percent lower.

Whereas government-backed loans were used in 3.3 percent of the purchases in June 2005, they were used in 58 percent of last month's sales through the MLS.

In June 2005, homes sold for just about exactly what they were listed for.

Homes spent 28 days on the market before selling in June 2005, compared with 84 days last month.

There was only about a 1.3-month supply of homes available in June 2005.

There were no homes sold locally for more than $800,000 last month, compared with 10 in June 2005.

So while nobody will confuse last month's data with those of the housing boom, there are signs that conditions are improving from the depths of the recession.

Bill Freehling: 540/374-5405
Email: bfreehling@freelancestar.com