MANCHESTER – Although national numbers indicate the housing slump may not yet be over, New Hampshire real estate sales show the local housing market is in the midst of a slow and steady recovery.

October home sales were up 8 percent, compared with sales in the same month last year, according to the New Hampshire Association of Realtors. Residential homes sales during the first 10 months of 2009 were also up, compared with the same period last year. The real estate group said these numbers indicate the year-end housing sales will end up higher than the prior year for the first time since 2004.

These state statistics were released the same week the U.S. Commerce Department announced a sharp decline in new-home construction, an indicator of the future health of the real estate industry. Housing starts unexpectedly fell 10.6 percent in October, compared with the prior month. The stumble is being attributed, in part, to uncertainty in the building industry over whether Congress would extend the $8,000 tax credit for first-time buyers beyond its Nov. 30 deadline. Earlier this month, Congress extended the credit through April and expanded it to include other buyers.

Lisa Chase, a Realtor with Gilman Real Estate in Exeter, said she's seen the market stabilize in recent months and that moderately priced homes -- those under or around $300,000 -- have been selling well.

"This first-time buyer credit has helped keep us afloat," said Chase. "It gets a little quiet around Thanksgiving, but we're still getting requests for showings, which is a good sign."

The New Hampshire Association of Realtors also pointed to the pending home sales index -- an indicator based on signed contracts -- as a sign the market is heading toward recovery. In August, the index showed a seventh consecutive month of gains, a pattern not seen since the index began in 2001.

"The cumulative effect of all the small things going on out there leads us to believe we're in the recovery phase of the housing market," said Dave Cummings, director of communications for the New Hampshire Association of Realtors.

Peter Francese, director of demographic forecasting for New England Economic Partnership, said despite tightening lending practices, lower housing prices and the first home buyers credit are making it easier for people to get into the market.

"First-time home buyers are much better off than they have been in at least the last five years," said Francese. At the peak of the real estate boom, the median home price in New Hampshire was five times the median income, pricing out many younger and middle income families. Today, the median home price is about 3.5 times the median income, making many homes more accessible to new buyers.

There is some concern that sales will drop off after the home buyers tax credits expire, but Cummings said the consensus in the industry is that the tax credit is not the only reason people are buying but is further encouraging them.

A dim spot in the New Hampshire market is the continued decline in housing prices. New Hampshire Association of Realtors numbers show that thus far this year, prices are down 11 percent over last year.

Cummings said although prices are still dropping, the New Hampshire housing supply has grown smaller, an indication of a shift from a buyers to a sellers market. Under the current rate of sales, it would take about 10 to 12 months to sell all the homes currently on the market. In January, that number was about 22 months, said Cummings. Anything more than six months is considered a buyers market, adding pressure on sellers to lower prices.