Fredericksburg-area housing prices rose nearly 15 percent last month compared with May 2011 and hit their highest point in nearly two years.

The median sales price in the region was $228,000, according to Metropolitan Regional Information Systems data released Monday. That was the highest median that prices have been in the region since August 2010.

The region comprises Fredericksburg and Caroline, King George, Spotsylvania and Stafford counties.

Realtors say increasing prices are crucially important in jump-starting the long-suffering housing market. They convince prospective buyers who are worried about prices falling to get off the sidelines. Increasing prices also mean fewer people are underwater on their mortgages, allowing them to list their homes and potentially buy different houses.

Perhaps due in part to the increasing prices, the number of homes listed in the region at the end of May, 1,491, was up more than 100 from the month before. Available inventory was still down 17 percent year-over-year, however.

The number of homes sold in the region last month, 396, was up 8.5 percent from May 2011 and was the highest total since last June. As a result of the improving sales and relatively low levels of available homes, there was just a 3.8-month supply of homes on the market at the end of May. That's lower than what is generally considered a good balance between supply and demand.

In Stafford there was just a 3.2-month supply of homes available at the end of May. That's leading builders to start large new subdivisions in the county, including Embrey Mill and Colonial Forge off Courthouse Road.

There were other positive signs for the market last month as well. Homes spent 74 days on the market on average before selling, which was down 22 percent year-over-year. The discount to list price was running at only 5 or 6 percent. And foreclosure sales represented only about 20 percent of the total, down significantly from a few years back.

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