Oahu single-family homes’ median price soared last month to its highest level in nearly five years and is approaching its all-time high.

The median price of $664,000 in May for previously owned homes was the highest mark since June 2007, when it reached a record $685,000, and was the third-highest level on record for the island, according to data Thursday from the Honolulu Board of Realtors. The median was up 11.6 percent from $595,000 in May 2011 and was the seventh straight month that the median has risen year over year. The second-highest median price was $668,300 in May 2006.

"It matches the annual record from the peak of the last cycle of about $650,000, so if you think about where we were at the tail end of the run-up, we’re back there now," said Hawaii economist Paul Brewbaker, principal of TZ Economics.

"We’re going higher. There’s no inventory. There’s no production. There’s no upper bound on it at this point except for the upper bound dictated by affordability. But that limit is higher today than it used to be because interest rates are lower today."

Prudential Locations Realtor Tom Mukai already is seeing the effects of the limited inventory, which was at 3.7 months at the end of May. That means all the available single-family homes would be gobbled up during that period of time if no new inventory were added and if sales progressed at the pace of sales in May. In May 2011 there was six months of inventory for single-family homes.

Mukai was the Realtor for a Kaimuki home at 852 17th Ave. that was listed for $665,000 and sold for $700,000 on May 25 after receiving three offers. It was listed for only 11 days.

"There’s limited inventory, and this happened to be a very good location in Kaimuki," he said of the three-bedroom, 1½-bath home with 1,080 square feet of living area and 4,500 square feet of land. "We priced it correctly. There was just a frenzy of people looking to buy something like this. It’s in good condition, didn’t need major repairs and was on the eastern side and upper side of Kaimuki, which was a good location."

Mukai said he was hesitant to say that Oahu has re-entered the bubble that occurred in 2005 and 2006.

"There was a bubble, but prices came down from those price points in 2007 and 2008," he said. "People overpaid, basically, and that’s reflective of what those homes are selling for today. People remember that and Realtors are more cautious. People want to get a property but want to make sure there’s good value."

There were 243 single-family home sales last month, matching the same total of a year ago. But that was still the highest total of any month this year.

Condominiums, meanwhile, sold at a median price of $300,000. They have been at that level or higher for five straight months. The $300,000 median in May was up 3.4 percent from $290,000 a year ago. The peak price for condos was $337,300 in May 2008. Sales of condos rose 12.4 percent to 371 from 330 a year ago.

Joe Paikai, president of the Honolulu Board of Realtors, said a large number of luxury home sales last month contributed to the median price of single-family homes peaking at $664,000.

"We also saw an increase in pending sales for both single-family homes and condos, which leads us to be optimistic going into the summer," Paikai said.

In addition, single-family homes sold at a faster pace last month compared with a year ago, with single-family properties listing for 28 days and condos listing for 32 days. A year ago, single-family homes spent 31 days on the market, and condos, 36 days.

Brewbaker says there’s no reason to believe that prices won’t keep rising.

"We’re talking about a market that has an unemployment rate of between

5 and 6 percent, which is not that high; a mortgage delinquency rate of about 3 percent, which is not that high; and we’re probably looking at a record year in tourism for visitor arrivals," Brewbaker said. "I don’t see any limit except the limit imposed by affordability.

"That limit is dictated by three factors: One is the price, one is income and the third is interest rates. Prices and income are essentially the same as five years ago and interest rates are lower. We know what the limit was in 2006 because it reached it at $650,000 and stopped and went back down. But that limit is no longer binding at $650,000 today. A near-term affordability limit of $750,000 could be possible through 2013, and longer-term million-dollar homes in the 2020s could be a reality."