Local home sales shot up in August by the largest percentage in years, while home prices continued to sag, according to a new report.

Last month’s sales rose 36.4 percent in King County and 28.3 percent in Seattle from August 2010, when the market was still hung over from the expiration of a home-buyer tax credit, the Northwest Multiple Listing Service reported Tuesday. Pending sales, which don’t all close but can be the best indication of recent activity, were up by 33.8 percent in the county and 28.4 percent in Seattle.

Sales rose 9 percent in the county and 7 percent in the city (2 percent and 4.4 percent, respectively, for pending deals) from July, although seasonal variations complicate month-to-month comparisons.

“For the first time in a long time, I can say with confidence that things feel better,” Windermere Real Estate President OB Jacobi said in a listing service news release.

“We shouldn’t get too distracted by the large increase in pending sales,” he added. “It’s a positive sign, but these figures are being compared to last summer’s post-tax incentive doldrums. With that being said, we’re excited about the positive momentum in the market.”

Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University said we won’t have an “apples-to-apples” comparison until next month, when September numbers come out, because the tax-credit hangover had worn off by September 2010.

The median price of a house that sold in August was $350,000 in King County and $380,000 in Seattle, down 7.9 percent and 9.5 percent, respectively, from August 2010 (and unchanged and down 5 percent from July). The median condo price was $193,000 in the county and $246,000 in the city, down 22.8 percent and 17.2 percent from a year earlier (and 3.5 percent, in both cases, from July).

While sales totals are “starting to feel a bit more normal,” Crellin said: “There are obviously still problems on the price side, and it’s going to be a while before they go away, I’m afraid.”

That’s because the county still has a lot of “distressed” homes, meaning homes that are under threat of foreclosure or have gone through the process and are now owned by lenders. These homes typically sell at substantial discounts, bringing down median prices.

The county now has a 4.7 month supply of homes for sale, based on the current sales pace, down from 8.6 months a year earlier. The city has a 3.4 month supply, down from 6.9 months.

“We’re seeing the most activity in the $600,000 to $800,000 price ranges in King County, but low inventory continues to be an issue across the board,” Jacobi said.

Crellin said the number of houses on the market is “starting to get back in normal ranges.”

Agents are seeing competition for homes under $1 million close to job centers in Seattle and Bellevue, John L. Scott Real Estate CEO J. Lennox Scott said in the news release. “With a low level of home inventory for sale and historically low interest rates, we are seeing a healthy volume of sales activity causing multiple offers.”

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