March home sale figures provide the strongest evidence yet that the current real estate cycle in Maine may have reached its peak.

After leveling off in January and February, the value of Maine homes began to decline slightly in March compared with a year earlier, reversing an upward trend that had lasted about three years. The number of home sale transactions in Maine also fell compared with a year earlier, continuing a downward trend over the past few months.

Before March, the last time both home sales volume and median sale price experienced a year-over-year decline in Maine was more than four years ago, in November 2014.

Maine is coming off a record year for home prices in 2018, and this year is expected to remain nearly as good for sellers. However, the buying frenzyof 2018’s spring and summer seasons has been slowly winding down as more potential buyers choose to take a wait-and-see approach. Many have become frustrated after losing out on multiple offers or failing to find a desirable property in their price range.

Even Cumberland County, the hottest housing market in the state, has experienced a decline over the past few months with both sales volume and median price dipping slightly from the same period a year earlier.

“I think the best way to look at it is that it’s been softening from a pricing point of view for the last four to six months,” said Michael Sosnowski, broker/owner of Maine Home Connection in Portland. “We’ve seen some appreciation over those months, but the rate of growth has definitely slowed down. Also, sales have been slow for the first quarter, but I don’t think that’s any reason to get alarmed yet.”

According to the Maine Association of Realtors, the median sale price of existing single-family homes in March was $210,000, down 1 percent from a year earlier. The median indicates that half of homes sold for more money and half sold for less.

Before March, the most recent month in which Maine home prices had experienced a year-over-year decline was February 2016, according to the association.

Home sales volume also declined in March by about 3 percent compared with a year earlier, the association reported Monday. Still, it said March sales remained strong from a historical perspective.

“For the fourth consecutive month, residential sales volume has shown (a decrease) compared to figures from a year ago, but (was) the third-highest March sales volume during the 17 years we’ve been collecting data,” said association President Peter Harrington, partner and associate broker with Malone Commercial Brokers in Portland.

Harrington said March was unusual in the sense that despite the decline in home sales, for-sale housing inventory also decreased by about 5.5 percent statewide. Normally, inventory increases when sales decline, he said.

“Buyers are in the marketplace but may not be finding the home that meets their needs due to the tight supply,” Harrington said.

Despite the year-over-year decline in March home prices, Sosnowski said he does not expect the value of Maine homes to trend downward overall this year.

But at the very least, there are signs that the appreciation of home values has slowed. The median sale price for a single-family home in Maine increased by 7.5 percent statewide in 2018. Sosnowski said he is expecting home values to appreciate at roughly half that rate – about 4 percent – in 2019.

“Nationwide, applications for mortgages are up, so I think what you’re seeing is a bit of pent-up demand,” he said. “It’s not going to be crazy like it was, you know, two years ago, but I think we’ll see some steady sales through the second quarter.”

Nationally, single-family home sales declined by 4.7 percent in March compared with a year earlier, but the nationwide median home sale price of $261,000 still represented a 3.8 percent increase over March 2018, according to the National Association of Realtors. Home sales in the Northeast region were down 1.5 percent from a year earlier, but the regional median sale price rose by 2.5 percent to $277,500, it said.

The association’s chief economist, Lawrence Yun, said in a statement that the national home sales figures should be higher based on the general state of the economy.

“It is not surprising to see a retreat after a powerful surge in sales in the prior month,” Yun said. “Still, current sales activity is under-performing in relation to the strength in the jobs markets. The impact of lower mortgage rates has not yet been fully realized.”

Real estate analysts say that in Maine, where the total volume of home sales is always relatively low, it’s better to look at a three-month rolling quarter to gauge which way the market is going. For the three-month period ending March 31, statewide home sales in Maine were down by nearly 6 percent from the same period a year earlier, and the median sale price of $205,000 was up by about 1 percent, according to  the Maine Association of Realtors.

Regionally, the biggest increase in home sales for the three-month period was in Piscataquis County, where sales were up by about 30 percent. The biggest decrease was in Knox County, where sales were down by 22 percent.

The biggest increase in median price for the three-month period was in Knox County, where the median sale price of $231,000 was up by nearly 16 percent from a year earlier. The biggest decrease was in Franklin County, where the median sale price of $117,500 was down by nearly 21 percent.

In Cumberland County, Maine’s largest housing market, home sales for the three-month period were down by nearly 4 percent from a year earlier, and the median sale price fell by about 1.5 percent to $292,000.

Lack of housing inventory remains a big deterrent to higher sales in southern Maine’s housing market, where the absorption rate – the estimated amount of time it would take to sell all currently listed homes – is 2.4 months, Sosnowski said. A six-month absorption rate is considered the standard for a housing market that is properly balanced between buyers and sellers.

It is still typical for a home priced between $225,000 and $350,000 with no glaring issues such as mold or a faulty septic system to sell right away in the Portland area, he said. But many of the homes currently listed are in the $500,000-and-up range and are therefore harder to sell.

“Higher-priced homes definitely have more competition, and they’ve got to find a way to be outstanding from the rest to sell really quick,” Sosnowski said.

Harrington said it’s too early to tell whether March’s home sales figures represent the beginning of a downward trend or just a momentary pause. Still, he said buyer frustration and other factors have clearly caused the state’s housing market to reach a plateau.

“A little slowing of the market, a little moderating of price could be good for some of the buyers that have been on the sidelines a little bit and been priced out of the market and competed out of the market,” he said. “It’s got to be frustrating for a buyer when they go put an offer on a house and there’s five other offers.”