Limited inventory weighs down home and condo sales on Oahu

Oahu’s housing market has been on a four-year upswing in sales volume, but that trend is now flirting a bit with a slowdown as relatively low inventory and high prices take a toll on buyers.

The Honolulu Board of Realtors’ April home sales data, due to be released Wednesday, showed median prices continued their modest ascent amid a decline in sales.

Median prices for single-family houses rose about 4 percent to $648,000 last month from $625,000 a year earlier, and for condominiums by 6 percent to $355,000 from $335,000.

The price increases continued a trend going into a third consecutive year. Sales volume, however, is showing some weakness.

The number of single-family house sales declined 12 percent to 247 last month from 280 a year earlier. It was the second decline this year after a 6 percent drop in February and resulted in a 2.7 percent dip this year through April.

Condo sales volume last month fell 2.6 percent to 445 units from 457 a year earlier, which followed a 6 percent decline in March and put year-to-date condo volume down 1.2 percent.

To be sure, a couple months of sales volume declines don’t make a trend. There have been prior years when a few months of declines early in the year were more than offset by later gains.

Honolulu Board of Realtors officials attribute the declines last month to limited inventory and not a drop in buyer demand.

"The supply of homes and condos on Oahu is constrained, so we don’t believe the downturn in sales is due to lack of demand," Julie Meier, president of the board and an agent with Prudential Locations LLC, said in a statement.

Meier added that the homes sold in April spent a relatively low number of median days on the market — 21 — which indicates strong buyer demand.

Dan Tabori, executive vice president of business operations for Prudential, said in a recent company report that the market is near record-low inventory as the pool of interested buyers is growing, which is one factor pushing up prices.

The number of homes on the market at the end of April was 1,170, which was up from 1,031 a year earlier and 1,069 in March.

There were 1,775 condos for sale at the end of April, which was up from 1,416 a year earlier and 1,678 in March.

Higher inventory in April could help lead to more sales over the next few months, given that it takes one to three months typically between the time a buyer signs a sales contract and when a sale is completed and counted.

Kristian Nielsen, owner of local brokerage firm Hono­lulu HI 5, said he expects a fairly steady volume of sales in the coming months.

"I don’t think you’ll see a significant swing in the number of sales," he said.

Nielsen does, however, expect prices to continue modest growth over last year.

Local economists have said prices are being pushed up by factors that include job growth, rising personal income and low interest rates that fuel demand in the face of supply constraints from relatively little new housing construction and tight inventory of existing homes for sale.

The University of Hawaii Economic Research Organization in March forecast that Oahu’s single-family house median sale price will rise 9.8 percent this year to about $710,000 and that the figure for condos will rise 6.2 percent to about $355,000.

This year through April the median single-family house price is up 5.7 percent to $650,000, and the median condo price is up 3.8 percent to $345,000.