Median home prices in Maine are rising, but the rate of growth still trails the rest of the country.
Numbers released Tuesday in Standard & Poor’s/Case Shiller’s housing index show home prices nationally increased by 12.2 percent in May compared with the same month last year — the biggest annual gain in the index in more than seven years.
Maine has been slow to catch on to that trend.
Home prices in Maine have been far less volatile than in much of the rest of the country over the past several years, said Bart Stevens, president of the South Portland-based Maine Association of Realtors.
Recovering demand coupled with a relatively small inventory of homes for sale are starting to be reflected in higher prices.
“A lot of the smaller, distressed properties have started to be eaten up,” said Stevens, an owner/broker with Century 21 Nason Realty in Winslow. “I think we’ll probably see the price continue to go up.”
The national median existing-home price for all housing types was $208,000 in May, up 15.4 percent from May 2012, according to the National Association of Realtors’ website. But in Maine, the median price in May was virtually unchanged from a year earlier, according to the Maine Association of Realtors.
In June, the national median price increased 14.5 percent to $214,700 over June 2012, according to the National Association of Realtors. But the median home price in Maine in June increased by only 4.8 percent to $184,000 from $175,500 over the previous year, the Maine Association of Realtors said.
Foreclosures and other distressed properties, which owners are under pressure to sell because they cannot afford to keep them, began driving prices lower in Maine in 2009. But Stevens said that phenomenon has virtually disappeared.
“We just don’t have a lot of distressed properties on the market anymore,” he said.
The number of single-family homes sold in Maine increased by 6.4 percent in June compared with a year earlier, according to the Maine Association of Realtors. That increased activity is likely to push the state’s home prices higher in the coming months, local experts said.
California, Nevada, Arizona and Florida led the nation in year-over-year price increases in May, the most recent month for which Case-Shiller’s U.S. home-price index is available. They were among the states that suffered the biggest home-price declines during the housing-market crash that began in 2007.
Real estate analysts said price increases nationally are being driven by a sharp reduction in foreclosures, investors holding on to rental homes and rising interest rates pressuring consumers to get into the housing market while rates are still relatively low.
Another factor likely to drive up Maine’s median home price in the coming months is the strong housing recovery in nearby Massachusetts, Stevens said.
That state’s median home price reached $350,000 in June, he said, which has spurred more retirees and second-home buyers to look for homes in Maine.
Still, the biggest segment of Maine’s housing market continues to be Mainers seeking a primary residence in the state, Stevens said. That market has picked up, too, particularly among first-time buyers.
“We’ve got a lot of first-time homebuyers who had been sitting on the fence,” he said.
Homeowners also have been getting into the market lately in Maine, as increased demand has driven up the price of their current homes.
Sidney resident and homeowner Jeremy Payne said he began looking for a larger house about two months ago.
He said the growing size of his family — Payne and his wife have three young daughters — was the primary reason.
Still, favorable market conditions also played a role, he said.
“The value of the home I’m looking to sell should be better than it was,” he said.
J. Craig Anderson can be contacted at 791-6390 or at: