First-half Report: Number of Homes Sold on O‘ahu Higher Than Each of Last Four Years
But June’s numbers plus some leading indicators suggest a softening in the real estate market
It’s true that mortgage rates have risen in 2022 – 2 whole percentage points since Jan. 1 to an average 5.3% last week for a 30-year loan – but the number of homes sold on O‘ahu during the first half of 2022 still outpaced the first half in each of the last four years.
In the first half of 2022, 5,650 single-family homes and condos sold, according to the Honolulu Board of Realtors. That’s 1% more than the 5,580 sold in the first half of 2021; 56% more than the first half of 2020, which included the first few months of the pandemic; 24% more than the first half of 2019; and 23% more than the first half of 2018.
Single-family homes accounted for 1,954 of the sales from January through June this year, down about 8.8% from a year ago; condo sales, with 3,696 units sold, were up 7.5%.
Rising Interest Rates
But the impact of rising interest rates is starting to be felt. June’s numbers released last week by the Honolulu Board of Realtors showed a slowing in sales of single-family homes – just 357 homes sold in June, a 20.8% drop from the number sold in June 2021. Condominium sales fell in June by 14.2% to 626 units.
“The rapid rise in interest rates is causing buyers to change tack and reevaluate their budgets and what they’re looking for in a home,” says Chad Takesue, president of the Honolulu Board of Realtors. “New listings are spending more time on the market compared to the frenzy in activity we witnessed last year.”
Nonetheless, prices stayed high. The median price of a single-family home in June was $1.1 million, a 12.4% increase from last year, while the median for a condo was $534,000, 16.1% higher than a year ago.
When you tally up the first six months of the year, the median price was $1.11 million for a single-family home on O‘ahu – 17% higher than a year ago and 41.6% higher than the first half of 2020. The median condo price for the first half of the year was $515,000, 13.2% higher than a year ago and 20.4% higher than two years ago.
Rising interest rates and inflation worries seem poised to play big roles in the numbers going forward: New listings of single-family homes were down by 18.8% in June from last year and pending sales – most of which close this month or next – were down by 27.7% in June compared to both last year and June 2020. New condo listings were down by 12.5% in June from last year, while pending sales were down 24.7%.
And while the active inventory of single-family homes in June increased by nearly 40% from the same month a year ago, the total inventory in escrow dropped 32.5%. The active inventory of condos declined by 2.6%, while total inventory in escrow dropped 31.8%.
“Sellers are also adjusting their strategies in response to market conditions,” says Takesue. “Over the past several months, we’re seeing more sellers decrease the asking price for their properties for single-family homes and condos.”