Saying it was more of a "blip" in activity, real estate agents shrugged at news that sales of existing homes in the Baltimore metropolitan area dropped last month, their first month-over-month decline in almost two years.

Sales for the month were 3.01 percent lower than those in May 2001, according to statistics released yesterday by the Metropolitan Regional Information Systems Inc., the multiple listing database used by local brokers.

The last time the monthly sales of existing homes failed to exceed the sales in the corresponding month of a previous year was in August 2000.

"There is a limit as to how long you can continue to forge ahead with the numbers over the previous year that we had," said Alan R. Ingraham, president of the Greater Baltimore Board of Realtors. "If this is a trend that we see for three or four months, it becomes an issue. If it doesn't, it may just be an aberration."

Sales increased last month only in Harford and Howard counties, rising 1.27 and 0.47 percent, respectively, Carroll County had the biggest decline, 7.23 percent, followed by Anne Arundel at 5.25 percent, Baltimore at 3.60 percent and Baltimore County at 2.66 percent.

"It's a blip," said Patrick Welsh, a veteran agent and past president of Greater Baltimore Board of Realtors. "Unless you see a significant swing, probably 15 percent or more, swings of less than that are really not that significant.

"So I think the test is going to be over the next two or three months. If you start to see a bit of an erosion, I think you could say that the market is finally beginning to plateau and start to level off a little bit."

Pending sales, an indication of future settlements, were off 1.7 percent for the month.

"We always thought that home sales growth would slow on a year-over-year basis, and I have no doubt that it will slow going forward compared to what we have been used to," said Anirban Basu, director of applied economics at Towson University's RESI. "That said, one should not infer from this that the bubble has burst or is bursting. The housing market still has to be characterized as quite strong."

Although sales may have fallen, two aspects - rising prices and inventory - continue to influence the housing market.

The average sales price for the area rose to $174,660 from $158,982 in May 2001, a 9.86 percent increase. Prices in Baltimore gained most, rising 21.58 percent to $91,447, up from $75,217 for the corresponding period last year.

'Huge premium'

"What was $200,000 is now $300,000 pretty much across the board, and the new buyers are coming in are paying it and not having a problem with it," said Cindy Conklin, an agent with the Federal Hill office of Coldwell Banker Residential Brokerage.

"Downtown, anything with parking gets a huge premium. ... [It's] parking, view and unit."

She said most of the homes she has listed for sale in the Federal Hill area have sold.

"If you look at the historic district, it is pretty much sold out, and if you look at Otterbein, it's pretty much sold out," Conklin said.

Lack of inventory

"I think the main thing right now is still a lack of inventory," said Tim Rodgers, president of Hill & Co., a Cross Keys boutique that deals in upscale properties.

Rodgers said the market for properties valued at more than $500,000 "has slowed" but that the market for lower-priced properties is active.

"It is very difficult to find anything under $225,000 now that is nice," Rodgers said.

Homes in "good old Rodgers Forge [in Baltimore County], which is a great barometer, they are still flying off the market at $165,000 and $175,000," he said.

The number of homes for sale through the MRIS multiple-listing database in metropolitan Baltimore seems to have steadied after dropping consistently since fall.

The number of homes on the market at the end of May stood at 7,709, compared with 7,762 in April and 7,705 in March.

Still, May's inventory is 28 percent lower than that of May 2001, when 10,661 homes were on the market, and 40 percent lower than in May 2000, when 12,837 were listed.

The lack of inventory is frustrating Ingraham, who also is a regional vice president of First Horizon Home Loans.

"We have a disproportionate number of pre-approved [buyers] in our pipeline vs. the number of houses available for them to buy," said Ingraham, who added that rates for a 30-year fixed mortgage have dropped to an average of 6.75 percent and might fall further.