Kansas City, Mo. ? Home sales in the Midwest surged 8.5 percent in July, the second straight annual increase, as new home buyers snapped up properties to take advantage of a temporary federal tax credit, the National Association of Realtors reported Friday.

The median sales price in the 12-state region declined about 6 percent from year-ago levels to $157,200 — the smallest decline among the four national regions, the association said.

Nationally, home resales rose 5.6 percent in July, the first annual increase since November 2005. Affordability is driving sales — the median sale price fell 15 percent to $178,400.

Compared with last year, home sales rose in all but three of the 12 Midwestern cities tracked in The Associated Press-Re/Max Monthly Housing Report, also released Friday. The report analyzed all home sales, regardless of company affiliation, in the metropolitan statistical areas.

While sales were up, median sale prices continued to fall in a majority of the markets, a combination of sellers being more realistic about the economic environment and consumers whittling away at a large inventory of foreclosed homes.

Real estate agents in several markets said they continued to see a boost in sales because of the first-time home buyer credit, which provides consumers with up to $8,000. The credit expires at the end of November, though the real estate industry is pushing Congress to extend it and sustain the housing rally.

Bryan Bechler, an agent with Reece & Nichols in Kansas City, Mo., said first-time buyers make up 20 percent of his sales. The local market appears to be at a turning point with July sales and prices flat.

The biggest sales gain came in Fargo, N.D., which saw sales rise 24 percent in July, according to the AP-Re/Max report. Median sale prices were also on the move, rising almost 8 percent to $143,000.

“I believe that at least in the last few months we’ve turned the corner,” said Mark Mason, an agent with Prudential Premiere, who said business in Fargo has boomed in the past three months as consumers bounced back from a bad winter and springtime flooding.

He said that sales have been up in most price ranges, although the very high-end homes above $800,000 are still difficult to move. He also said new regulations forced on appraisers in the wake of the housing bubble has increased the time for deals to get done from two weeks to two months or longer.

“We’re having little glitches like that that are driving us crazy,” Mason said.

Detroit continued to see higher sales in July, rising 15 percent. But those sales are mostly of foreclosed homes or properties selling for a fraction of their original worth as investors pick at the bones of a city racked with losses to its automotive and other manufacturing industries. The median sale price plummeted almost 34 percent from year-ago levels to $65,000.

The largest Midwestern sales drops came in the cities of Wichita, Kan., Indianapolis and Cleveland, which have experienced continued pressure to their local economies and saw sales declines of about 9 percent or more in July.

Wichita has dealt with a number of layoffs within its key aviation industry as the recession dried up the market for private and corporate jets. Sales in the market fell almost 16 percent in July while the median sale price declined 7 percent to $124,900.

Marilyn Brown, an agent with Prudential Dinning-Beard, said the Wichita market typically lags the rest of the country and it is just now seeing the increase in foreclosures that has hurt other parts of the country. “If we could get finished with all the layoffs, people can feel confident about keeping a job and buying a home,” Brown said.