Oahu home sales prices up just 5% last month

Prices for Oahu homes sold in September rose less than 5 percent, representing one of the weaker months this year while still holding to an upward trend that will no doubt make 2016 a record for housing costs.

The Honolulu Board of Realtors said in a report released for publication today that the median sales price last month rose 2.7 percent to $750,000 for single-family homes and 4.7 percent to $383,250 for condominiums compared with prices last year.

The gains were modest and reflected what brokers say is strong demand from buyers looking at a fairly tight supply.

However, September’s price gains were considerably softer than what they were for the first nine months of the year as a whole: 5.2 percent and 8.7 percent for single-family homes and condos, respectively.

A recent report by economists at the University of Hawaii forecasts that the pace of Oahu home price appreciation should gradually ease in each of the next three years, which means median sales prices will still set new records — they just won’t jump as much as they did the previous year.

The report published last week by the University of Hawaii Economic Research Organization expects the median price for single-family homes, which was about $700,000 last year, will rise 6 percent this year and next year, then just 3.9 percent in 2018 and 0.9 percent in 2019. That would put median prices at roughly $785,000 next year, $815,000 in 2018 and $820,000 in 2019.

For condos the median price was at about $360,000 last year, and is projected to rise 7.2 percent this year to nearly $390,000, then 6.9 percent to $415,000 next year followed by 5.6 percent to almost $440,000 in 2018 and then 3.3 percent to $453,000 in 2019.

If those predictions hold, this year will be the fifth in a row of record prices for single-family homes and condos.

UHERO said the gain this year is somewhat surprising for its relatively small size but could be due in part to anemic income growth and restrictive lending standards. Higher prices also make homes less affordable, while low interest rates are helping drive demand.

The number of home sales this year through September is about 5 percent greater for single-family homes and 9 percent greater for condos compared with the same nine months last year.

For just September there were 329 single-family home sales, unchanged from the same month last year. For condos there were 512 sales, up 6.7 percent from 480 a year earlier.

Inventory of homes available for sale has been relatively tight. There were 1,203 single-family homes on the market last month, down from 1,296 a year earlier. There were 1,810 condos for sale last month, down from 1,941 a year earlier.

Kalama Kim, president of the board and principal broker at Coldwell Banker Pacific Properties, said in a statement that the decreased inventory levels are a concern. “More inventory is needed to satisfy the demand for housing, which has been the case for some time,” he said.

Added Scott Higashi, president and CEO of local brokerage firm Locations, “With record low inventory and high demand, Oahu’s real estate market remained fiercely competitive in September.”