are people on the Seacoast feeling the fallout of the national financial crisis?

American citizens have had a lot of staggering headlines thrown at them in recent months: mortgage giants flirting with bankruptcy, thousands of people losing their jobs, hundreds of thousands of homes in foreclosure, and a $700 billion bailout. For the average consumer, the numbers can be overwhelming. But to what degree are Seacoast residents feeling the pinch of the national economic situation?

By most any measure, New Hampshire is faring better than the rest of the country. The state’s unemployment rate is almost 2 percent lower than the national average and 1.5 percent lower than the rate across New England. And while there have been thousands of foreclosure deeds in the Granite State, they have not approached the losses experienced in places like Florida, California, Texas and Nevada.

But many people are still hurting, and there have been few indications that the situation is getting any better. Home values have declined by $40,000 in Rockingham County, and foreclosure deeds have more than quintupled in the state since 2005. And while the unemployment rate is comparatively low, it has been slowly but steadily climbing, month after month.

Perhaps even more devastating is that consumer confidence appears to be at an all-time low. What separates the current crisis in the United States from recessions of the past is “the enormously swift and almost total disintegration of our financial system, and that, in my lifetime, is unprecedented,” said Peter Francese, director of demographic forecasts for the New England Economic Partnership. “That means that there are hundreds of thousands of people in New Hampshire who are very nervous and pessimistic and cautious and are pulling back on their spending.”

That consumer mood does not bode well for area businesses. But, according to Francese, things could be much worse. New Hampshire is better equipped to deal with the financial crisis than most other states in the union.

“We are extraordinarily fortunate in New Hampshire to have a number of things that work in our favor that simply are absent in lots of other states,” Francese said.

For one thing, New Hampshire is an affluent state—10th wealthiest in the country, in terms of average household income, according to Francese. Unlike most of the nation’s other wealthy states, including Massachusetts, New Hampshire does not have any major cities. “So, we have the wealth without the kind of issues that urban areas bring,” he said.

Also, New Hampshire does not rely on one or two large employers to drive the economy. The state is full of highly educated entrepreneurs and small local businesses that are less affected by the crisis. What’s more, New Hampshire is a veritable haven for older retirees who do not work but have plenty of money. 

That’s probably of little consolation to the thousands of New Hampshire residents who have lost their homes over the last few years. Dan Smith, of the N.H. Housing Finance Authority, provided a breakdown of foreclosures over the last four years. There were fewer than 500 foreclosure deeds filed in New Hampshire in 2005. The following year, there were 1,057 foreclosure deeds, an increase of 129 percent. In 2007, there were 2,071, a 96 percent increase over the year before.

As of the end of September, there had already been 2,605 foreclosure deeds filed in 2008. According to Smith, that puts the state on pace for about 3,500 deeds by the end of the year, which, if accurate, would represent another 70 percent increase.

There were 259 foreclosure deeds filed in the month of September alone, up from 146 in September 2007. That’s an increase of 77 percent. The month saw 49 foreclosure deeds in Rockingham County and 19 in Strafford County. For the entire year through September, there were 600 deeds filed in Rockingham County—far more than were filed across the entire state in 2005.

Smith agreed that New Hampshire is better off than many other states. But he also acknowledged that the steady increase in foreclosure deeds has shown no signs of slowing down. “It has not tapered off yet,” he said.

When will the numbers level off? Smith couldn’t say with any certainty. He tossed out a ballpark estimate with several caveats. “If we see improvement in economic conditions—including consumer confidence, including energy costs, including loosening of credit—then I suppose we could see some turnaround within six months,” he said.

A small turnaround was seen in home sales in New Hampshire during the month of September. A total of 1,006 homes sold that month, compared to 981 in September 2007, according to numbers provided by the N.H. Association of Realtors. That’s an increase of 2.5 percent. 

However, during the third quarter of 2008 (July through September), 3,162 homes sold in New Hampshire, down from 3,509 during the same period in 2007. That’s a decrease of 10 percent.

A statewide decrease in home prices might be partly accountable for the slight increase in sales during the month of September. The median residential home price in September 2008 was $232,500, down from $252,000 the year before, a decrease of almost 8 percent. The median price dropped by 10 percent during the cumulative third quarter, from $264,500 in 2007 to $238,000 in 2008.

Looking specifically at Rockingham County, 222 homes sold in September, up 17.5 percent from 189 in September 2007. But over the cumulative third quarter, sales dropped from 736 in 2007 to 695 in 2008. Median price during the same period dropped from $325,000 a year ago to $285,000 this year.

The percentages were fairly similar in Strafford County, where home sales increased by almost 20 percent in September but the median price dropped by almost 9 percent. Home sales for the entire quarter dropped from 303 to 256 and the median price fell from $240,000 to $219,950.

Home prices also dropped sharply in Maine. According to the Maine Real Estate Information System, the median price of a single family home in September was $177,500, down 6.5 percent from the previous year. Unlike New Hampshire, Maine also experienced a decrease in home sales, which fell by almost 10 percent that month.

Nationally, the median price for a single-family home fell by 8.6 percent between September ’07 and September ’08, from $208,600 to $190,600. But the national number of home sales increased by almost 4 percent, from 4.45 million to 4.62 million.

The increased home sales in September represent a glimmer of hope for state officials who have been starved for good news. “That’s kind of a bright spot for us,” said David Cummings, director of communications for the N.H. Association of Realtors.

But Cummings said it’s nearly impossible to predict whether the positive trend will continue. “It’s really like shooting at a dartboard in the dark,” he said. “It’s a little ray of hope that we hope will be an indicator of things to come, but we really don’t know.”

The other good news, depending on how you look at it, is that declining values make homes in prohibitively expensive market areas like Rockingham County more affordable for first-time buyers.

“If you are a young person who has never owned a home before, then it’s a great time to buy. It’s a perfect time to buy,” Francese said. “Homes are now affordable for you—lots of them.” 

But the financial crisis has also had the effect of deterring many people from seeking loans. Many consumers, apprehensive about credit markets, assume they’ll be turned down. Others are hesitant to borrow money at a time when they’re not sure they’ll be able to pay it back.

“Consumers are concerned. Their cutting back on spending and borrowing, and frankly, that’s appropriate,” said Gerald H. Little, president of the N.H. Bankers Association.

For consumers who are confident about their finances, however, banks in New Hampshire are generally well capitalized and able to lend, Little said. Banks here mostly steered clear of the subprime mortgage lending that has gotten other states into trouble, and their records are relatively clean.

“What people will see is that underwriting is a little more strict,” Little said.

Still, most consumers are holding back, waiting for the election season to pass and home prices to stabilize. Many businesses have planned less growth for the coming year and are holding off on refinancing, Little said.

The auto industry has been hit especially hard, as hordes of consumers have decided this is not the best time to buy a new car. Other retail businesses and restaurants have also suffered from consumer apprehensions. Francese said the Seacoast is by no means immune from national economic woes.

“There’s no doubt that small local businesses that depend on people coming in and spending money are going to have a difficult time and are having a difficult time right now,” he said.

Francese estimated that area businesses might be doing 10 to 25 percent less business than they did in better economic times. In other parts of the country, however, businesses have watched their sales plummet by 50 to 75 percent. Most local businesses will make it through these tough times by cutting back on employee hours or watching costs. “Very few of them are going to have to just close the door,” he said.

Not all businesses are doing poorly. The Music Hall announced that it drew 3,000 people to its theater in Portsmouth over a three-day period from Oct. 27 to 29. The streak was highlighted by Madeleine Albright’s appearance for Writers on a New England Stage and Joe Jackson’s performance for the Intimately Yours concert series, both of which sold out. 

Other establishments are trying to attract customers with special deals. The Coat of Arms in Portsmouth has begun offering small plate specials that are bigger than appetizers but smaller and less expensive than full meals, according to manager Mark Adams.

But the doors have been closed on many employees in the state. According to the latest numbers from the Federal Reserve Bank of Boston, New Hampshire’s unemployment rate in August was 4.2 percent, climbing from 3.9 percent the month before. In August 2007, the state’s unemployment rate was 3.4 percent.

New Hampshire’s numbers were still considerably better than the national unemployment rate of 6.1 percent in August, as well as the average New England rate of 5.7 percent. The unemployment rate in Maine was 5.5 percent, while Massachusetts was at 5.3 percent and Vermont was at 4.9 percent.

The unemployment rate in the Portsmouth area was just 3.9 percent in August, up from 3.6 percent in July and 3.1 percent in August 2007. The rate in the Rochester-Dover area was 4.0 percent in August, while the rate in the Manchester area was 4.2 percent. Between unemployment, foreclosures, energy prices, health care accessibility and other factors, no one appears to have a firm idea of when things will start to turn around. “The biggest thing that we’re facing right now is uncertainty,” said Jim Lyons, president of the N.H. Association of Realtors. “The economy is just so volatile right now. There are so many things going on.”

That sense of uncertainty is afflicting millions of people across the country. “Anyone can understand that the level of confusion and the level of uncertainty is at historic levels because no one that is alive today has ever seen the American government plunk down $700 billion” and nationalize dozens of banks, Francese said.

Lyons expects the future economic picture to get a bit clearer in the aftermath of the election, when people have at least eliminated uncertainty over who the next president will be. “I think we need to get the election cycle over,” Lyons said. “A lot of people are fatigued by the whole thing.”

Little agreed that getting past the election will add some stability. But he noted that the winter is a slow season for housing markets, especially during times of economic turmoil. Nevertheless, he is confident that a market upswing will eventually provide relief.

“There generally is a fairly discernible moment when the market turns around and home prices start to appreciate again,” Little said. “Real estate brokers will know when that moment arrives.”

It has not arrived yet. One way to gauge improvements, Little said, is by looking at how long homes remain on the market before they sell. New Hampshire homes that sold in September were on the market for an average of 129 days (more than four months), up almost 6 percent from September 2007. That’s slightly better than the year-to-date average of 132 days through the first three quarters of the year.

According to Francese, the economic situation, both on the Seacoast and across the country, won’t really improve until consumers again feel comfortable spending money on home improvements, automobiles, entertainment and everything else.

“In my mind, consumer confidence is everything,” Francese said. “Until people begin to feel better about the prospects for the national and local economy, we could be in for some very slow economic times.”