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Maryland's housing market may be reviving, with foreclosure rates down, sales of new homes up and inventory shrinking, according to the most recent statistics.

Improved year-over-year foreclosure numbers, combined with improved sales,  have been Maryland's first indication of an improving housing market in several years, said Kenneth R.C. Wenhold, Washington regional director for Metrostudy, a Houston market data company.

Wenhold said Maryland's housing trends often follow those of Northern Virginia, which has reduced its inventory by nearly half in the past five months in some counties.

"Now it's not a matter of whether Maryland's housing market will recover, it's a matter of how fast," Wenhold said. "Northern Virginia has tightened up much faster than we expected. We're hopeful Maryland will do the same."

With 2,247 homes in various stages of foreclosure — or one out of every 1,024 households — Maryland's foreclosure rate declined 20 percent compared to Sept. 2007 and 30 percent compared to August, according to new data from RealtyTrac of Irvine, Calif.

Tom McLister, a Bank of America mortgage broker in Frederick, where foreclosures decreased 15 percent but were still the second highest in Maryland, said the small bits of good news, combined with cuts in interest rates, have triggered an influx of loans.

"Definitely the activity is up a lot," McLister said. "Consumer confidence in the market is really what drives it. Any bit of good news and you'll see a response. It's a very easy trend to follow."

Montgomery County noted a 16 percent decrease in foreclosures compared to last year and a 55 percent decrease compared with Aug. 2008. Prince George's County, continued to have the worst foreclosure rate in Maryland, saw a year-over-year increase of 57 percent, but a 1 percent increase compared to August.

The number of houses on the market has declined sharply since July, as sales of new single-family homes have picked up. September listings fell 11.6 percent to 389 homes, compared with 440 homes on the market in September 2007, according to the Frederick County Association of Realtors.

While there were 50 percent more contracts in September compared with August, year-over-year contracts declined 11 percent. The number of settlements on single-family homes increased 51.2 percent from 123 in September 2007 to 186 settlements last month, with the largest increase in homes under $150,000.

Meanwhile, the sales of homes increased in 14 of Maryland's 23 counties in September, according to the Maryland Association of Realtors' monthly report. In total, the number of units sold increased 8.5 percent statewide, from 3,938 in 2007 to 4,271 in 2008.

During that time, the average price declined 6.6 percent from $348,112 to $325,167 and the median price declined 8 percent from $295,121 to $271,520.