The amount of time it takes to sell a home is shrinking, according to a new measure by the National Association of Realtors.

For traditional sellers, it’s in the range of historic norms, below the peak levels attained in 2009.

The median time a home was listed for sale was 69 days in July, down 29.6% from 98 days a year earlier. The median reflects a wide spectrum, with one-third of homes purchased in July sitting on the market for less than a month, while one in five for at least six months.

NAR notes the figures can be misleading at times because any recent flux of new listings can skew the numbers downward.

NAR’s new measure reveals a longer selling time than historic findings, which measured only nondistressed homes so comparing the new numbers to past years isn’t a true comparison. NAR now figures in short sales, which generally take three months or longer to sell. 

Factoring out short sales, the median time on market for traditional sellers is about six to seven weeks, NAR said. That compares to 10 weeks in 2009, considered the peak list time for nondistressed buyers since the economic downturn. The median price fell 12.9% that year, which was the biggest annual decline on record.

As inventory has tightened, homes are selling more quickly.

“A notable shortening of time on market began this spring, and this has created a general balance between homebuyers and sellers in much of the country,” Lawrence Yun, NAR chief economist, said. “This equilibrium is supporting sustained price growth, and homes that are correctly priced tend to sell quickly, while those that aren’t often languish on the market.”

NAR projects median existing home prices will rise 4.5% to 5% in 2012 and about 5% in 2013, somewhat stronger than historic norms because of the pronounced inventory shortfall in the low price ranges, Yun said.

Yun’s comments mirror those from housing economists at Bank of American Merrill Lynch ($8.58 0%), who recently revised their home price forecast higher, predicting prices would rise by 2% in 2012 and in 2013. They cited inventory falling at an unexpected pace and a shift toward short sales as reasons for the revision.

BofAML housing analyst Michelle Meyer said a better alignment of housing supply and demand is adding to the continued housing recovery, despite sluggish growth in the overall economy. 

During the 2004 to 2005 peak of the housing boom, inventory averaged 4.3 months, and the median list time totaled just four weeks. Prices during that time frame rose 10.3% annually, NAR said.

At the end of July, a 6.4-month supply of homes sat on the market at the current sales pace — 31.2% below a year earlier when there was a 9.3-month supply.

“If housing construction doesn’t pick up to normal levels within two years, supply shortages could be sustained for an extended period and lead to above average appreciation,” Yun said.