Sales of existing single-family homes on Oahu in October suffered their biggest drop so far this year as fear of recession as well as rising mortgage rates, high home prices and stubbornly high consumer prices gave some buyers pause.
The Honolulu Board of Realtors reported Sunday that resales of single-family houses dropped 41.7% in October to 222 from 381 in the same month in 2021.
October’s decline represented the ninth consecutive year-over-year decrease in monthly sales volume for single-family residences on the island and followed declines of 34% in September, 26% in August, 23% in July and 21% in June.
For Oahu’s condominium market, sales volume declined 28.8% to 435 units in October from 611 a year earlier. The drop followed decreases of 19% in September, 25% in August, 23% in July and 14% in June.
Combined single-family homes and condominium total sales was 657, the fewest total combined sales since June 2020 when the pandemic was in full swing and there were 614 sales.
Median sale prices for single-family homes and condos on Oahu decelerated, though prices remained up year-over-year. Single-family homes have stayed at the $1 million level or higher for 15 months in a row.
In May the median single-family home price set a record at $1,153,500. October’s median sales price was $1,050,000, which represented a 5% gain from $1 million in the same month in 2021.
However, the median price of single-family homes fell for the second month in a row after hitting $1,125,000 in August and $1,100,000 in September
Condo prices rose for the second month in a row to hit $520,000 in October, the second-highest price ever for condos, as prospective homebuyers sought out more affordable purchases. The increase was 4% above last year’s $500,000 median sales price. The record was set in June at $534,000.
Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate fell to 6.95% from 7.08% the previous week. The rate was 3.09% last year at this time. The rate decrease came one day after the Federal Reserve raised its benchmark borrowing rate to its highest level in 15 years as it tries to squelch four-decade-high inflation.
Sales of existing homes nationwide have declined for eight straight months as borrowing costs have become too high a hurdle for many Americans already paying more for food, gas and other necessities. Meanwhile, some homeowners have held off putting their homes on the market because they don’t want to jump into a higher rate on their next mortgage.
The increase in price and decline in purchasing power has made for a less frenetic market in Hawaii, even though new listings were down for both single-family homes and condominiums.
In October, new listings dropped 24.2% for single-family homes and 25.8% for condos year over year. Even so, properties are taking longer to sell with both markets reporting fewer new listings in escrow or sold by the end of the month.
Approximately 30% of the new listings were in escrow or sold by the end of October. Last year, that portion was 56% for single-family homes and 48% for condos.
The number of days on the market also has more than doubled in both markets, which averaged 19 days as compared with eight or nine days a year ago.
Contract signings in October were down 50.5% for single-family homes and 45.7% for condos.
The slowdown has meant that all regions saw an increase in the number of total single-family homes on the market. Several regions, including Ewa Plain, Leeward, Makakilo and Pearl City saw more than double the inventory from last year.
Active inventory for condos increased across most of the island, though inventory was down in Diamond Head and Pearl City, dropping 43% and 26%, respectively.
The rise in active inventory has meant that there is less pressure for home prices to increase and has reduced the number of buyers that are making offers above asking price. In October, 50% of single-family home sellers received their full asking price or more as compared with October 2021 when 75% of single-family homes sold at full asking price or more.
The condo market in October also saw 48% of sales close at the full asking price or more, compared with 59% last year.
Chad Takesue, president of the Honolulu Board of Realtors, said in a statement, “Higher financing costs are dampening buyer activity, meaning sellers’ properties are spending more than a week longer on the market compared to last year.
“As buyers and sellers seek a new balance under the current market conditions, we’re also seeing the prevalence of bidding over the asking (price) start to wane compared to what we saw in 2021.”
Single-family homes in the $800,000 to $999,999 range made up the largest portion of October sales. Sales in this sweet spot accounted for about 31.5% of all sales, though the number of sales in that range has dropped off from 42.6% at the same time last year. Meanwhile, sales of higher-priced properties at $2 million and above experienced a sharp 63.3% drop in sales.
Sales volume dropped most significantly in Diamond Head and the Ewa Plain regions, which fell 62% and 53%, respectively.
The decline in condo sales in October occurred primarily in the $799,999 and below range, dropping 34.4% year over year, while sales in the $800,000 and above range saw a modest increase of 4.6%.
The Ewa Plain and metro regions recorded the most significant condominium sales drops, declining 50% and 24%, respectively.
“Especially as the market shifts from the active environment we saw during the pandemic to the softer situation we see now, Realtors serve as trusted advisors and educate clients about where opportunities exist to meet their real estate needs,” Takesue said.
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The Associated Press contributed to this story
HOME SALES
The number of homes sold on Oahu in October with the median price and percentage change from the same month in 2021:
HOMES
SALES MEDIAN PRICE
2022 222 $1,050,000
2021 381 $1,000,000
Change -41.7% 5%
CONDOS
SALES MEDIAN PRICE
2022 435 $520,000
2021 611 $500,000
Change -28.8% 4%
Source: Honolulu Board of Realtors
