BALTIMORE (Map, News) - While the economy undoubtedly cooled this winter, Realtors, retailers and employers hope for a spring thaw. Though unemployment statewide increased, housing prices dropped, which may take buyers off the fence, and retail sales improved.

Housing prices drop, new home inventory stable

The median sale price of homes in the Baltimore-metro area fell for a fifth straight month in March, and the average sale price fell for a third consecutive month, according to local data.

Bad news? Not really, some Realtors say.

“Salaries didn’t soar in the last couple years, so as we look around the real estate market we need to make the corrections in price,” said Bill Cassidy, sales manager of Long and Foster Fells Point.

The median sale price, the price at which half of all home sales fell below and half above, was $259,900, down 3.2 percent from March 2007, according to data released earlier this month by Metropolitan Regional Information Systems Inc., a Realtor-owned service. The data doesn’t separate new-home sales from existing-home sales.

But a federal Census Bureau report released Thursday said new-home sales in March fell to their lowest level in 16 years, down 8.5 percent from February and 36 percent from a year earlier. The median price of a new home sold in March was $227,600, down 10 percent from $254,000 a year ago, according to the report.

Local inventory has stabilized in recent months with about 19,000 units currently on the market, said Lou Baker, president of the Home Builders Association of Maryland and Pulte Homes’ Mid-Atlantic division.

“It’s been hovering in that band for the last few months, so it’s possible we’re seeing some stability there,” he said. “We’re still seeing people on the sidelines, so pent-up demand is being created. Hopefully some stability will convince these people to get in the market.”

Retail sales up in February after two down months

The 2007 holiday shopping season was one of the worst in recent memory, as cautious consumers, anxious over news of an economic slowdown, pulled back on expensive gift purchases.

A few months after the holidays, Maryland shoppers appear to be heading back to malls and department stores.

The state’s Comptroller’s Office uses monthly state sales tax receipts to gauge consumer spending, and February’s results, the most recent reported, were positive after two months of decline.

In February, sales tax receipts increased about 3.4 percent from the year before. In January, sales were down about 3.5 percent from the year before, after sales sunk almost 8 percent in December from the year before.

“After two months of decline, any sort of growth is a good sign,” said David Roose, director of the Bureau of Revenue Estimates. “[But] monthly receipts can be up or down for all sorts of reasons, and you don’t want to put too much weight on them.”

According to the National Retail Federation, national retail sales for March dipped 0.9 percent from last year and were down 0.3 percent from February. Consumers clearly are adjusting their spending as gas, energy and food prices increase.

A 3 percent increase is relatively weak when, under normal economic conditions, Maryland retailers expect 4.5 percent to 6 percent sales increases, Roose said. But in the current climate, retailers should be pleased with any increase.

“Three percent is weak,” Roose said, “but it’s a little bit stronger than we’re expecting to see the rest of the year.”

Unemployment rises across nation, state

Employers and job seekers similarly will look for better results for the rest of the year, as national payroll employment declined by 232,000 in the first three months of 2008.

Before national and state unemployment numbers were released by the Labor Department for March, Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business, said if there was a third straight month of job losses, “it would be hard to deny that the economy has entered a recession of unknown depth and duration.”

There were more jobs losses in March — 80,000 — and the unemployment rate did increase — from 4.8 percent to 5.1 percent — confirming Morici’s recession forecast.

“This is a key indicator of the depth and duration of the recession, which began in December,” Morici said.

In Maryland, the unemployment rate increased to 3.6 percent in March from 3.4 percent in February, according to the Department of Labor. The number of unemployed increased by 5,900 from 102,500 to 108,400.

“Further job losses will indicate problems in the financial sector are damaging the real economy in lasting ways that will take many months, even years, to repair,” Morici said.

acannarsa@baltimoreexaminer.com

acahall@baltimoreexaminer.com