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Economists have long said that 2013 would be the turning point for the housing recovery. If July is any indication, their predictions are dead-on.

Buyers snapped up more homes in July than in any month since mid-2006, according to the Minneapolis Area Association of Realtors. There were 5,638 sales in the metro area, an 18 percent jump over July of last year.

Home prices also marched closer toward prerecession levels. A combination of pricier homes for sale, slowing foreclosure activity and bidding wars drove the median sales price to nearly $209,000 last month.

A similar recovery is playing out across the country. The National Association of Realtors said home prices rose 87 percent of the 163 U.S. cities tracked by the group.

"Traditional seller activity is on the mend," said Emily Green, president-elect of the Minneapolis Area Association of Realtors.

The shift is being fueled by an economic turnaround and a sense of urgency that didn't exist a year ago. The Twin ­Cities has regained all the jobs it lost during the recession, leading to heightened confidence in the housing market. Buying activity has been so brisk that there aren't enough homes to meet demand.

"Buyers cannot be timid," said Gary Judson, a sales agent with Edina Realty. "They must be prepared to act quickly and convincingly. If they want to bid low on new listings and try to get the seller to negotiate, they will likely be replaced by more-­serious buyers."

Such excitement has bolstered sales for much of the year. During the first seven months of 2013, sales reached 30,518, a 10 percent rise over last year and the most since 2005.

Bidding wars are breaking out across the Twin Cities, which is helping to narrow the gap between what sellers want and what buyers are willing to pay. On average, sellers got 98 percent of their asking price last month, compared with 88 percent during the worst of the market in early 2011.

"Clean, well-priced homes are still selling in multiple offers within days," Edina Realty's Judson said.

Tiptop condition is required

Those bidding wars are happening in communities close to the hustle and bustle of the Twin Cities and in neighborhoods with easy access to parks, jobs and other amenities. Buyers, however, aren't willing to fight for every listing. Houses must be in tiptop condition and be priced competitively.

"If they want an offer in the first days of marketing, we need to price it right," said Rebecca Brandt, an agent with Roger Fazendin Realtors in Wayzata. "Many sellers are still expecting a higher price than our market is showing."

Brandt and other agents say July's gains come on the cusp of what is typically a seasonal slowdown in sales as families take summer vacations and prepare kids for the return to school. Over the weekend, Brandt hosted three open houses, but has noticed that traffic has slowed and the buying frenzy isn't even across the market.

Real estate agents also say higher interest rates could stem the momentum in the market. Rates have inched up in recent months and recently averaged 4.4 percent, a full percentage point above historic lows. Nevertheless, some agents say those higher rates are the very thing motivating house hunters.

"Rising interest rates are sparking purchasing decisions to be made now versus later," said Kate Beckman, president of the St. Paul Area Association of Realtors and a sales manager with Coldwell Banker Burnet.

She and other agents say sellers are gaining an edge because heavily discounted foreclosure sales are on the decline, making it easier for sellers to raise prices in addition to reducing the number discounted sale comparables used by home appraisers.

As recently as July 2011, foreclosures and short sales comprised 45 percent of all sales. Last month, those sales represented just 20.6 percent of all closings.

Judson said sellers are often unprepared for how competitive the market has become.

"When I have listings, one of the first questions I ask is, 'Do you have a place to go?' because the window may be very tight from listing to closing," he said. "When you bring someone an offer after just a few days on the market, they are still shocked, even though you have warned them.''

Jim Buchta • 612-673-7376