Buyers snatched up hundreds more homes last month than they did a year ago in the Baltimore metro area, a record 36 percent increase economists attributed to a mad rush to get an $8,000 federal tax credit.

In September, area home sales had risen about 10 percent over the previous year.

The tax credit, aimed at first-time buyers, was due to expire at the end of this month. Last week the program was extended and expanded, with higher income limits and a $6,500 credit for many homeowners buying again. But an extension had been no guarantee, and many local buyers were trying to get in under the wire last month. The number of new contracts signed - pending deals, not sales - was up 65 percent from a year ago, according to numbers released Tuesday by Metropolitan Regional Information Systems.

"It is the housing market version of 'Cash for Clunkers,' " said Baltimore economist Anirban Basu, referring to the government incentive program to trade in old cars for new ones. "It shows that when consumers are sufficiently stimulated, they will act on big-ticket items."

Doris Hall-Scheeler, senior vice president at Sage Title Group's White Marsh office, saw a lot of people pull out of contracts they feared would not close by Nov. 30 and then make offers on other homes, so focused were they on getting that $8,000. "There was just a huge flurry of activity to find a house they could move forward with," she said.

More buying hasn't stopped prices from falling, in part, economists say, because first-time buyers are gravitating toward foreclosures and other distress sales. Average sale prices for homes dropped about 8 percent in the metro area from a year earlier, MRIS said. Average homes sold for about $275,000.

The Baltimore area's 36 percent increase in home sales is the biggest year-over-year jump since the Rockville-based MRIS began tracking the market in the late 1990s. Even during the housing bubble, when buyers flooded the market thanks to low interest rates and too-easy lending terms, annual sales increases never reached 30 percent.

The collapse in home-buying activity that began in late 2005 was so large, however, that the number of homes changing hands last month still pales compared with the frenzied activity of the peak. Buyers closed deals on 2,219 homes last month, about 1,400 fewer than in October 2005.

Celia Chen, who studies the housing market for Moody's, expects that home sales will continue rising. But not by leaps and bounds next year, and expect more price declines, she warns. The company thinks prices will be about 10 percent lower in the Baltimore metro area next spring - when expects the market will bottom - than they were last spring.

"There will be a lot of cheap homes available," Chen said.

The price drop is a plus for new homebuyers, who were increasingly priced out of the market during the run-up earlier in the decade. But it's a problem for homeowners, especially those who bought during those bubble years. Falling values, sharply rising unemployment and mortgages extended to people who couldn't afford the terms have all contributed to a flood of foreclosures.

Meanwhile, some homeowners just want to do what many homeowners do in normal markets - move up or downsize. Ann and Dayl Carlson put their home of 36 years on the market in September so they can move in with their daughter and son-in-law. "They're putting an addition on their home for us," Ann Carlson said.

The Carlsons' four-bedroom duplex is one of nine homes for sale in the Elmwood neighborhood, part of Overlea in eastern Baltimore County. Their agent, Carol Fertitta, decided to organize a group open house to give buyers a way to see the whole neighborhood at once. Seven homes will be open during the event, from 2 p.m. to 5 p.m. Sunday.

Fertitta, who said the market "is still very slow," hopes the expanded tax-credit program will make a difference for sellers. After a stretch with no lookers, the Carlsons had two this week.

"A lot of people had stopped looking - first-time homebuyers - because they knew they wouldn't be able to settle by Nov. 30," Fertitta said. "Now that it's extended, they're sort of re-energized and they're starting to look again."

Under the terms of the credit, buyers have until April 30 to sign a contract and June 30 to close the deal.

The real estate industry pushed to have the credit expanded, and Congress passed it as part of a strategy to kick-start the economy by trying to stabilize the sector that helped start the recession. Basu, chief executive of Sage Policy Group, said the tax credit "is precisely what this housing market requires to sustain its momentum."

But Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute for Public Policy Research, a think tank that promotes free enterprise, thinks the credit is a bad idea. It's "pulling activity into today from the future" by prompting people who would have bought later to buy now, he said. Meanwhile, Hassett said, the program redistributes money from people who aren't buying to people who are - or at least claim they are.

The IRS sent out checks to tens of thousands of people who fraudulently claimed the credit, including those who didn't meet the definition of first-time buyers and those who didn't buy anything at all. A provision of the extended credit requires taxpayers to prove they bought a home, but Hassett doubts that will eliminate the problem of buyers claiming the money despite not qualifying for it.

"It's actually kind of insane that they have renewed it," he said.

Another new report on the housing market - this one focused on summer trends across the country - says home sales rose faster in Maryland than all but seven other states and the District of Columbia, compared with a year earlier. The third-quarter statistics, released Tuesday by the National Association of Realtors, show Maryland home sales up 15 percent.

The national trade group also tracked sale price changes among single-family homes in metro areas, and it said the Baltimore area saw a 6.5 percent drop. That's a bigger price decline than for 90 other metro areas, but not as much as about 60 others.

Topping the country with a nearly 20 percent jump in sale prices: Cumberland, in Western Maryland. Its median price of $122,000 makes it one of the nation's less-expensive housing markets.

Baltimore, with a median price of $261,000, is one of the more expensive of the 153 markets the National Association of Realtors tracks. Seventeen are pricier.

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