Texas continued its trend toward modest recovery in the first quarter, as home prices remained stable throughout the beginning of the year. The median existing-home sales price was $143,300 for the three months ended in March, according to the Texas Association of Realtors, up 1.3% compared to the first quarter of 2010. Although the volume of home sales is down 7.3% compared to the same quarter of 2010, economist Jim Gaines said the data is not necessarily indicative of shrinking demand. "In evaluating the first quarter of 2011, we must remember we’re comparing it to the first quarter of 2010. That time period included March, which was one of the most heavily government-stimulated months of the year by the homebuyer tax credit," Gaines said. He is with the Real Estate Center at Texas A&M University, which contributed to the quarterly study. "While we expected sales to be down given this anomaly, we expected the decrease in the sales volume to be much greater, suggesting that the market is performing well despite the absence of tax credits." About 40,000 homes sold in the first quarter, according to the report. The inventory of available homes increased over the same time period, up to 7.5 months from 6.8 months last year. However, TAR reported that number is smaller than the last two quarters, which held 7.6 months in the fourth quarter and eight months in the third quarter. "Texas is still performing considerably better than other states in terms of maintaining balance between home inventory and demand," Gaines concluded. Foreclosure Listing Service found foreclosure activity in North Texas hit a 40-month low in March based on the number of distressed properties available for the April auction. Housing starts also grew moderately in February, according to the Federal Reserve Bank of Dallas. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.