HONOLULU — O‘ahu’s sluggish real estate market is finally starting to pick up steam.
Single-family home sales soared 20.1 percent in July to their highest level in nearly two years, and the median price hit its fourth-highest point ever, according to recent data from the Honolulu Board of Realtors.
With the average 30-year mortgage rate hovering below its lowest level in more than a year, buyers rushed in during July amid cooling inflation and before the start of the school year.
There were 269 sales of previously sold homes, compared with 224 a year earlier. The last time sales were higher in a month was 278 in September 2022.
The median price rose 4.6 percent to $1,140,000 from $1,090,000 — its highest level since $1,149,500 in November 2022. The only other times the median price was higher were $1,153,500 in May 2022 and $1,150,000 in March 2022.
But the condominium market remained lackluster as resales fell 7.8 percent in July to 389 from 422 a year ago, but did rise 9.6 percent from 355 in June. The median price for condos edged up 1.8 percent in July to $509,000 from $500,000. The record price for condos was $536,000 in March 2023.
The median price is a point at which half the sales are for more and half for less.
“While year-over-year sales are mixed, we saw activity in both single-family home and condo sales pick up in July, which is typical for this time of year,” said Fran Gendrano, president of the Honolulu Board of Realtors. “Demand and median sales prices are continuing to hold steady, particularly in the single-family home market, despite an uptick in active inventory.”
O‘ahu’s inventory continued to build in both markets with a 10.6 percent month-over-month increase for single-family homes and an 8 percent gain for condos. At the end of July, there were 722 active single-family home listings and 1,867 active condo listings. Those figures were up by 22.2 percent and 61.8 percent, respectively, from a year ago. Rising inventory signals that demand has softened.
“We’re closely monitoring the interest rate, condo insurance and new practices and policies that could affect our market, but it will take some time to see any impact,” Gendrano said.
The average rate on a 30-year mortgage edged higher last week, holding close to its lowest level in more than a year.
The 30-year average mortgage rate was 6.49 percent last week, down from 7.09 percent a year earlier and significantly below a 23-year high of 7.79 percent in October. The rate has mostly hovered around 7 percent this year — more than double what it was just three years ago.
The Federal Reserve is widely expected to cut its benchmark interest rate in September for the first time in four years, with economists predicting either a reduction of a quarter-point or a half-point. The Fed will announce its decision Sept. 18. A reduction would lower rates for borrowers and make purchasing a home more affordable.
Local real estate brokerage firm Locations said there is continued evidence of demand on O‘ahu, with single-family homes entering escrow in about three weeks and condos in about four weeks. The market remains competitive with 3 of every 10 home sales and 2 of every 10 condo sales bid up over the asking price.
However, the pace of sales remains about 20 percent percent below the pre-pandemic period, Locations noted.
“At halfway through 2024, the O‘ahu single-family home market is gaining steam while the condo market continues to show signs of easing,” Locations Chief Sales Officer Chad Takesue said. “Despite higher borrowing costs, home prices are rising. On the other hand, condo prices haven’t moved from a year ago.”
Takesue said rising inventory and flattening prices in the condo resale market can mostly be attributed to challenges in condo associations obtaining sufficient hurricane insurance and, consequently, financing.
“It’s important to know what financing options are available for condos with less than 100 percent replacement cost or condos with additional deferred maintenance and reserve study issues,” Takesue said. “The good news for buyers interested in these condo options is that prices have remained flat. We’re continuing to see strong buyer demand and activity for new condo projects, which tend to not have such issues.”
