The first quarter of 2008 presented a number of challenges to the real estate market.

A weakening national economy, along with the continuing difficulties in the financial and mortgage markets, have resulted in uneven performance in the real estate market.

We do not need to repeat the types of headlines that have been appearing in the various media that we all read, listen to and watch on the nightly news. Suffice it to say, there have certainly been enough stories covering mortgage problems, foreclosures, declines in home prices, home sales, and so forth. While these have mostly covered national issues, Connecticut is not immune to the effects.

The ‘doom-sayers’ are always there and will always make predictions about the coming collapse of the market and other insurmountable catastrophes, but when rational thought prevails, we recognize that we are simply in a weak part of a traditional business cycle. Yes, these still happen, and this cycle will run its course. In the meantime, one thing is certain: people will continue to move and purchase homes.

Our state hasn’t been a speculative marketplace and this stands in stark contrast to some other areas of the nation. We also are not overbuilt with large standing inventories of new homes on the market, another characteristic of other locations nationally. Connecticut is also very fortunate to have an economy that has been performing relatively well.

The following is a summary overview of the housing market in the first quarter of 2008. For complete details, please review the individual community data that appears in this report.

Single-family and condominium sales have decreased year over year (about 32%). This was anticipated based on the lower levels of deposits in the last months (especially November and December of 2007). We started 2008 with fewer sales in process, so this slow start is reflected in the first quarter sales statistics. That trend began to shift in March.

Looking at the rate of deposit activity in March and very early April shows an increase in the rate of deposits. As we write this report, there are about 4,600 pending single-family sales and 1,600 pending condo sales. While there may well be some that don’t close, the numbers are pretty good. There is still a market out there!

We have also been hearing (on the national news again) that there is almost a 10-month supply of inventory nationally. When we run this same number for the state of Connecticut, on an overall basis, it comes out to about a 5-month supply of inventory on the market (at this time). Clearly, even if all of the pending sales do not close, Connecticut is well outperforming the national figure. There has not been significant inventory increases here, which is certainly good news.

Median sales prices do show some modest declines, but do not show precipitous drops and we do not believe that this will be the case here. There are areas of the nation (several states in the West, Southwest and Southeast) that do show significant year over year price declines. It is important to keep this difference and distinction in mind.