Explanation:

- Let's look at the sentence where the blank (3) appears: "They __________ housed far away from the volcano."

- The sentence is in the past tense, so we need a past tense verb.

- Option 1: "were" fits well in this context. It indicates the people were housed at some point in the past.

- Option 2: "had" would imply an incomplete context. It is often used in past perfect tense and needs another past action for reference.

- Option 3: "have" is a present perfect tense, which doesn't fit the past narrative.

- Option 4: "is" is present tense, which also doesn't match the past context of the passage.