The median sales price of previously owned single-family homes on Oahu stayed below the $1 million mark for the second month in a row, and days on the market nearly quadrupled — signs that the local housing market is continuing to soften amid high inflation, relatively high mortgage rates and concerns about a looming U.S. recession.

February’s single-family home median price was $987,000, down 12.3% from $1,125,000 in the same month in 2022, according to Honolulu Board of Realtors data released Monday. The median price is a point at which half the sales were at a higher price and half were at a lower price.

The median sales price of previously owned single-family homes first eclipsed $1 million in August 2021 and consistently met or exceeded that mark until January. The median sale price decline was the third consecutive year-over-year decrease after a 0.5% dip in December and an 8% slip in January.

Demand from homebuyers had been constricting since February 2022 in Oahu’s single-family home market, and sales a year later are still falling. In February, 173 single-family homes sold, a 28.2% drop from the year-prior 241. Still, the drop in sales volume was more moderated than in January, when sales fell 54% to 150.

Fran Villarmia-Kahawai, Board of Realtors president and an agent at Properties International Ltd., said in a statement, “Oahu’s housing market is in a very different place from a year ago, with activity calming across all facets. Average mortgage rates began to dip heading into February but started to tick higher throughout the month weakening buyer purchasing power compared to one year ago.”

Average interest rates on 30-year fixed-rate loans hit a three-month high last week. Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate rose to 6.65% from 6.5% the week prior. The average rate a year ago was 3.76%. As rates rise, they can add hundreds of dollars to monthly mortgage payments — pricing some buyers out of Honolulu’s historically high-priced market.

Realtor Shannon Severance, who was honored this month as RE/MAX Honolulu’s top producer for the state at the RE/Max’s R4 convention in Las Vegas, said, “The trend is there’s more inventory right now in the market for buyers. However, with interest rates being so high, their buying power went down tremendously.”

Severance said some buyers have adjusted to the market by buying “less house” or considering condominiums. The interest rates and other factors weighing on Oahu’s housing market also have been putting downward pressure on prices and sale volume of condominiums.

To be sure, the Board of Realtors reported that the number of condominium sales in February sank 33.1% to 325 from 486 in the same month a year earlier. A string of falling year-over-year sale volume began in June with a 14% decline that grew in size over the second half of 2022 to around 40% in November and December, and hit 50% in January.

Condominiums sold for a median $480,000 in February. That was down 3.4% from $497,000 a year earlier. The record was $534,000 in June.

The share of condomi­nium sales closing above the original list price shrank only 15% in February, compared with 37% in February 2022. Of the sales this month, 36% received full asking price or more, compared with 56% of sales in 2022.

Severance said in addition to price breaks, sellers may offer other incentives to buyers, who at this stage of the market are less plentiful than inventory.

She said she has some clients who have decided to buy now while there is less competition and better deals, with the expectation that they will be able to refinance to lower interest rates later.

“Something I’ve been able to say to multiple buyers is, ‘Date the rate. Marry the house,’” Severance said. “Because nobody is going to carry their mortgage for 30 years, and people are anticipating that interest rates will go down again.”

Severance said some military buyers, a market that she specializes in, have been able to avoid rising interest rates by assuming VA mortgages from sellers, who had better rates than are currently available in the market.

“Some of our veterans have been able to find VA assumable loans in the 2%-to-3% range,” she said. “In these cases they take over the loan from a veteran, who gets their own VA entitlement back. Sometimes they have to cover the difference in the loan and the sales price with cash, but sometimes financing is available.”

Severance said her business is still strong, although operating at a slower pace, with the added challenge of ensuring that buyers and sellers are adapting to the changing market.

“It’s a lot harder to get the buyer off the fence or get the seller to correctly price — it’s just educating the client, because the last thing that I want to do is stick my sign in the yard and have it sit.”

In February, single-family homes skyrocketed to 47 days, compared with 13 days in February 2022, according to the Board of Realtors. The median days on market for condominiums doubled to 28 days, compared with 14 days a year ago.

Another sign that the market has changed was that the share of single-family homes sold above the original asking price fell dramatically from a year ago, accounting for just 19% of sales in February, compared with 55% in February 2022. That meant only 32% of single-family home sales received full asking price or more, compared with 73% in February 2022.

Chad Takesue, chief operating officer of local real estate brokerage firm Locations, said in a company report released Monday, “The Oahu real estate market notably softened in February, as homes sat on the market longer and instances of multiple offers continued to decrease. However, we did see pending sales trending up, which demonstrates that there is still demand in the marketplace.”

Severance said sellers who need to move are readily listing their homes, but there might be hesitancy among those that are contemplating moving simply because they want a different home.

The Board of Realtors reported that there were 233 new single-family home listings and 463 new condo listings in February — down 36.5% for single-family homes and 37.3% for condominiums.

Takesue said, “New listings have been lagging for 10 months, as we’ve seen greater hesitation among sellers driven by declining median prices, a reluctance to give up lower financing rates and general economic uncertainty.”

Takesue added that although the Oahu market has moderated since the post-pandemic surge, it’s reassuring to see market activity following seasonal trends.

“As we head into spring, we expect to see a return to typical patterns, with more for-sale inventory and increased competition — similar to market conditions four to five years ago.”

HOME SALES

The number of homes sold on Oahu in February, with the median price and percentage change from the same month in 2022:

HOMES

SALES MEDIAN PRICE

Feb. 2023 173 $987,000

Feb. 2022 241 $1,125,000

Change -28.2% -12.3%

CONDOS

SALES MEDIAN PRICE

Feb. 2023 325 $480,000

Feb. 2022 486 $497,000

Change -33.1% -3.4%

Source: Honolulu Board of Realtors

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The Associated Press and Star-Advertiser staff writer Andrew Gomes contributed to this report.