New contracts on homes for sale in the Baltimore area rose to their highest June level since 2007 — a positive sign for a housing market trying to heal after a years-long roller-coaster ride.

Buyers and sellers struck deals on nearly 2,600 homes in Baltimore and its five surrounding counties last month, Rockville-based Metropolitan Regional Information Systems said Monday.

That's about 30 percent more than the number of contracts signed last June — when activity plummeted after a federal tax credit for first-time homebuyers expired — and exceeds recessionary June 2008 by almost as much.

It even topped the number of new contracts signed two years ago, when the tax credit was still in effect, by 8 percent.

But analysts warned against taking the upturn as the start of a new housing boom.

"That doesn't mean recovery or 'We're out of the woods,' but it means less of the manic conditions of the last three years," said Jonathan Miller, an appraiser and housing-market consultant who analyzes the Baltimore area for Metropolitan Regional Information Systems' statistics arm.

"Best case is a moving-sideways scenario."

High unemployment and lots of foreclosures have been a drag on many markets, including Baltimore, and probably will remain so for at least several years, Miller said.

The sales figures tell that story. Though pending deals were on the rise, June home sales in the area — settlements on contracts signed predominantly in April and May — represented the smallest number in at least 13 years, according to Metropolitan Regional Information Systems data. The company runs the multiple-listing service used to buy and sell homes in the area.

The average price for a home sold in June, meanwhile, dropped 7 percent compared with a year earlier. That $278,000 price is $60,000 less than in 2007, when the average peaked, and is down almost to what the average buyer paid seven years ago.

That price slump, though not as dramatic as those in the hardest-hit regions, such as Miami and Las Vegas, has left many area homeowners with mortgage balances higher than what they could sell for.

As a result, some who would otherwise have moved have had to sit tight. Others are losing their homes to foreclosure or trying to negotiate a short sale, in which a lender agrees to accept less than the total owed.

Such distress deals help explain why 28 percent of homes that sold in the Baltimore metro area in May, the most recent figures from the real estate search site Zillow, changed hands for less than the previous purchase price. That's up from 21 percent a year ago, according to the Zillow data.

The real estate data firm Clear Capital is predicting that the Baltimore region will backtrack another 3 percent on home prices during the second half of the year.

After hanging on to more of its bubble-era price gains than the nation as a whole, Clear Capital says, the Baltimore area will likely see some of the largest losses among major markets in 2011. The company based its forecast on the region's increasing share of foreclosure resales, which it estimates now make up 25 percent of the market.

"There may be a lot of potential for future losses," said Alex Villacorta, Clear Capital's director of research and analytics.

But one bright spot for sellers is that there are fewer homes competing for buyers' attention. About 17,000 homes were on the market in the Baltimore metro area in June, down 7 percent from a year earlier, according to Metropolitan Regional Information Systems.

That works out to seven homes in need of a buyer for every one that sold.

Real estate agents say homes that are priced well and look good usually sell, and fairly quickly at that. Azam Khan, a real estate agent with Long & Foster in Baltimore, figures that about a third of the homes on the market fit into that category. The rest, he said, are overpriced or have other problems — and so they sit and sit.

Still, Khan is seeing more sellers willing to do what it takes to make a sale. And buyers respond when they find good deals, he said. In three of the 15 contracts in which he was involved at the end of May and beginning of June, the sellers got more than their asking price thanks to multiple offers.

"We didn't go exorbitantly over asking, but certainly there was competition," Khan said.

One client, 30-year-old Gregory Buchman, saw enough demand in the Catonsville neighborhood where his family wanted to move that he made a full-price offer on a three-bedroom townhouse in good condition. He closed on the deal in June. The $234,900 price seemed fair to him, particularly after the sellers kicked in about $8,000 to help with closing costs.

He and his wife, Nicole Buchman, prepared for the purchase for two years, getting their finances in order and zeroing in on the right place. They didn't get caught up in the debate about whether it's a good or bad time to buy. They have a 1-year-old son, and their two-bedroom apartment wasn't cutting it anymore.

"It just became very apparent that we were running out of space," said Gregory Buchman, a surgical assistant.

Khan said personal situations — the need for more or less space, to be in a different area and the like — are pushing more prospective buyers and sellers off the fence. After so many years of market upheaval, the real estate agent said, "people are tired of waiting."

Marney Kirk, a real estate agent with Keller Williams Realty in Timonium, thinks more reasonable asking prices from sellers — and buyers nervous that mortgage rates won't remain low indefinitely — are also playing a role in the rising number of contracts.

"Things are definitely picking up," she said.

jhopkins@baltsun.com

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