Paul McKee, president of the Maine Association of Realtors, outside a home his Keller Williams group put on the market in Portland’s West End in August. Compared to last month, more homes were sold statewide and the median price dropped, but prices are still higher than they were at this time last year. Brianna Soukup/Staff Photographer

Want to buy a house in southern or coastal Maine? Be prepared to spend more than half a million dollars.

It costs more than $500,000 to buy a home in three of Maine’s 16 counties – Cumberland, York and Lincoln – and four others are not far behind, in the $400,000s, according to data released Thursday from the Maine Association of Realtors.

The state’s ongoing inventory shortage, coupled with the high demand for single-family homes, has led to a record-breaking year for home prices in Maine.

The median sale price in October was $395,000 – a roughly 5% increase from October 2023, but a 3.4% decrease from September’s record-setting $409,000. Prices usually peak in the summer and early fall, during real estate’s busy season.

Along with prices, sales have also increased, continuing the trend so far this year, a deviation from several years of plummeting sales during and immediately after the pandemic.

According to the association, 1,481 homes changed hands in October, a 3.2% increase from the year before.

Paul McKee, president of the Maine Association of Realtors, said that so far this year, sales are up almost 4% from the same 10-month span in 2023. And they show no sign of reversing course.

“We are on track to finish the year favorably,” said McKee, a Portland-based broker with Keller Williams.

NUMBERS INCONSISTENT STATEWIDE

The market has varied across the state, with some areas still experiencing multiple offers and pricing pressure, while other markets have added enough inventory to stabilize prices, McKee said.

“Maine needs additional housing supply. As markets gradually move toward a better balance with increasing supply, aspiring buyers have more choice and a better negotiating position for affordability,” he added.

The Maine Association of Realtors also looks at three months of data in county-by-county comparisons to get a larger sample size of sale transactions.

Sales increased by about 3.4% between Aug. 1 and Oct. 31 compared to the same period last year, while prices increased about 6.7% to $400,000.

The number of sales statewide was inconsistent, with seven counties reporting decreases and nine reporting increases. At each end of the spectrum, closings decreased by 14.3% in Sagadahoc County and increased by 15.6% in York County.

Cumberland County remains the most expensive county in Maine, with a median sale price of $570,000, a 3.6% increase over the same three-month period last year. York County was the second highest, with a $533,200 median, an almost 9% increase. Lincoln County hit $520,000, a 15.6% increase.

Aroostook County remains the least expensive in the state, with a median sale price of $174,950 – the only county with a price below $200,000.

Sagadahoc County saw a 17% increase in prices from $400,000 to $470,000, while Knox and Piscataquis counties reported the only price decreases in the state.

FIRST-TIME BUYERS STRUGGLING

Nationwide, single-family home sales rose 3.5% and prices increased 4% to $412,200, according to the National Association of Realtors. Regionally, sales in the Northeast remained unchanged, while prices increased 7.6% to $472,900 compared with last October.

“The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said Lawrence Yun, chief economist for the national association.

The increased inventory will help moderate price increases next year, he said.

This should be particularly welcome news for first-time home buyers, who are struggling in the current market.

First-time buyers accounted for just 24% of home sales last year, a decrease from 32% the year before and the lowest percentage since the association started collecting data in 1981, according to the group’s annual profile of buyers and sellers. The few first-time buyers were also older, with a median age of 38, up from 35 last year.

Mortgage rates have been particularly important for new buyers, who tend to rely on mortgage lenders without the equity or cash on hand to compete with more experienced homeowners.

According to mortgage buyer Freddie Mac, the rate for a 30-year mortgage was 6.78% last week, a decrease from 7.44% the year before. Rates plummeted to below 3% during the pandemic and many people refinanced – further decreasing the inventory as homeowners decided to stay put and not jeopardize their low payments.

But according to Yun, while mortgage rates are still higher than they were a few years ago, they are expected to stabilize, likely encouraging both buyers and sellers to enter the market.