LIHU‘E — A steep drop in sales of single-family homes, likely brought on by rising mortgage interest rates, helped keep the median price of home under $1 million in the County of Kaua‘i last month.
As a result, the median price of a home dropped to $987,500 in September, compared with $1,172,500 in September 2021, according to monthly data pooled from multiple sources by the Hawai‘i Realtors of Honolulu.
That marked a price decrease of 15.78 percent in the period, as well as the second straight month the median price of a single-family residence came in under the $1 million mark in the county.
At the same time, the number of single-family homes that exchanged hands sank to 28 from 64, or 56.25 percent.
As for the county’s condominium market, it fared about the same as single-family homes, with sales at 24 in September. That was down from 49 in September 2021, or 51.02 percent.
However, the median price of a condo rose 11.63 percent to $691,000 from $619,000 in the same period.
Despite the downturn in business and price, the long-term outlook for the housing market in a post-pandemic world appears bright, largely because the county housing market is fueled by the same thing that drives any other commodity.
“Supply and demand,” said Jimmy Johnson, broker in charge at RE/MAX Kaua‘i, on Friday, Oct. 21. “It’s gorgeous here, and there is always demand.”
That demand was better reflected in year-to-date data, which showed the median price of a single-family home weighing in at $1.15 million for the nine-month period ended Sept. 30. That was up from $1.077 million, or 6.78 percent, in the nine-month period ended Sept. 30, 2021.
In the same comparable period, the number of single-family homes sold fell to 398 from 577, or 31.02 percent.
On a heartier note, at least for sellers, price gains were stronger year-to-date in the condo market. The median price of a condo increased 15.66 percent to $705,500 from $610,000. But, sales slid 29.70 percent to 348 from 495.
The decrease in sales of condominiums and single-family residences can be traced, in part, to rising mortgage interest rates.
The average for a 30-year, fixed-rate mortgage has more than doubled in the last year to 6.94 percent in the week ended Thursday, Oct. 20, according to mortgage giant Freddie Mac. One year ago, the long-term rate was 3.09 percent.
Worse yet, the average rate for the 15-year, fixed-rate mortgage has soared to 6.23 percent from 2.33 percent in the past year.
Those rate increases can add hundreds of thousands of dollars to the cost of buying a home over the lifetime of a loan depending on the price of a residence, in turn significantly impacting markets. That scenario is playing out across the United States, said National Association of Realtors Chief Economist Lawrence Yun in a statement on Thursday, Oct. 20, regarding existing home sales.
“The housing sector continues to undergo an adjustment due to the continuous rise in interest rates, which eclipsed 6 percent for 30-year fixed mortgages in September and are now approaching 7 percent,” he said. “Expensive regions of the country are especially feeling the pinch and seeing larger declines in sales.”
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Wyatt Haupt Jr., editor, can be reached at 808-245-0457 or whaupt@thegardenisland.com.
