Home sales on Oahu spiked last month as low interest rates helped motivate more buyers despite relatively little inventory in the market.
The Honolulu Board of Realtors reported Tuesday that sales of previously owned single-family homes and condominiums jumped close to 30 percent in October. Median prices also rose, but the gain there was a continuation of a fairly moderate trend this year.
Single-family home sales surged 26.5 percent to 282 in October from 223 in the same month last year. Condominium sales surged 32.4 percent to 425 from 321 in the same period.
The surge in volume was stunning to some observers — more so in the condo market where the number of sales last month was higher than it has been in any month since August 2007 when there were 495 sales in the waning stage of a market boom.
The gain in single-family home sales was more a product of low sales in October 2011.
Through the first 10 months of this year, sales of single-family homes and condos are up about 5.5 percent, the trade association data show.
The median price for single-family homes in October was $625,000, up 7.9 percent from $579,000 a year earlier. This year through October, the median is $623,250, up 9.3 percent from $570,000 a year ago.
The median condo price in October was $325,000, up 6.6 percent from $305,000 a year earlier. October’s median price was the highest for any month since October 2010 when it was $335,000. Year-to-date, the condo median is $315,000, up 4 percent from $302,790 a year ago.
Rising sales and median prices reinforce the view of local economists and real estate agents that Hawaii’s largest housing market is firmly into a new growth cycle.
Joe Paikai, president of the Honolulu Board of Realtors and broker-in-charge at Keller Williams Realty, said the spike in condo sales last month is a "definite sign" of the market’s continued recovery. "October was a great month for the local real estate market," he said in a written statement.
Ricky Cassiday, a local housing market analyst, said interest rates that recently dipped to record lows likely prompted more prospective buyers to cinch sales. "It’s enabling people to buy," he said.
Average interest rates on 30-year fixed-rate mortgages have notched down from about 3.9 percent at the start of this year to between 3.4 percent and 3.6 percent in the past three months, according to Freddie Mac.
Cassiday said if elevated sales continue, it will put added upward pressure on prices that are already pressed higher in part due to relatively low inventory.
Last month there were 1,066 single-family homes listed for sale, down from 1,419 a year earlier and 1,193 in September. In 2006 near the height of the last boom, inventory topped 2,000 homes.
Condo inventory in October stood at 1,600 units, down from 1,821 a year earlier and unchanged from September. Condo inventory in 2006 topped 3,000.
Low inventory creates more competition among buyers, and puts sellers in a better position to obtain higher prices. This scenario, Cassiday said, helps drive up the median price, which is a point at which half the sales are for more and half for less.
The University of Hawaii Economic Research Organization also has noted that housing inventory, which is not being expanded much by developers, is a main factor influencing its prediction for future Oahu home prices.
UHERO recently forecast that the median price for existing single-family homes will rise 6.8 percent to $670,600 next year and then 7.7 percent to $722,400 in 2014 and then 10.8 percent to $800,100 in 2015.
UHERO forecasts the median condo price will rise 5.9 percent to $333,300 next year and then 7 percent to $356,500 in 2014 and then 8.6 percent to $387,300 in 2015.
