LIHU‘E — Sales of single-family homes and condominiums plunged on Kaua‘i in February, despite a slight retreat in long-term mortgage interest rates to start the new year.
A total of 24 home sales closed in February, down from 44 in February 2022, according to monthly data pooled from multiple sources by Hawai‘i Realtors in Honolulu. That marked a decrease of 45.45 percent.
At the same time, the median sales price of a single-family home dropped 21.70 percent to $1,050,000 from $1,341,000.
The condo market wasn’t any brighter, as sales sank 45.45 percent to 24 in February from 44 in February 2022, while the median sales price fell 11.54 percent to $674,500 from $762,500.
“Under a million dollars, there is activity. There are people looking,” said Jimmy Johnson, broker in charge at RE/MAX Kaua‘i, on the single-family home market. “But those people are probably getting a loan. And they are super nervous, super cautious.”
That trepidation stems from the wild ride mortgage interest rates have been on since the Federal Reserve began raising its key lending rate last year in an effort to combat inflation.
The 30-year fixed rate, which is the most popular way to finance a home purchase, responded and hit a two-decade high of 7.08 percent in fall 2022. While the long-term rate slipped in the months that followed, it started to climb again in early March before easing this week.
The 30-year rate averaged 6.42 percent in the week ended Thursday, March 23, down from last week when it averaged 6.60 percent, according to a weekly report from Freddie Mac, the mortgage giant. A year ago at this time, the 30-year rate averaged 4.42 percent.
The decrease in the 30-year rate this week fueled some optimism amid a backdrop of recent bank failures at home and financial trouble abroad.
“Mortgage rates continued to slide down as financial market concerns came to the fore over the last two weeks,” said Sam Khater, chief economist at Freddie Mac, in a statement that accompanied the weekly report.
“However, on the homebuyer front, the news is more positive with improved purchase demand and stabilizing home prices. If mortgage rates continue to slide over the next few weeks, look for a continued rebound during the first weeks of the spring homebuying season.”
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Wyatt Haupt Jr., editor, can be reached at 808-245-0457 or whaupt@thegardenisland.com.
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