Oahu’s shrinking housing inventory is pushing up prices.
The median sales price for a single-family house on Oahu climbed in February to the second-highest level ever at $755,000, according to data released Monday by the Honolulu Board of Realtors.
Last month’s median was up 7.9 percent from $700,000 in the year-earlier period and just missed reaching the record high of $760,000 hit in June.
“The volume of single-family houses coming onto the market is not keeping pace with the demand,” Sue Ann Lee, president of the Honolulu Board of Realtors, said in a statement. “With limited inventory, it is no surprise that home prices are soaring.”
Active listings of previously owned houses fell 9.5 percent in February to 1,012 from 1,118 a year ago. And the number of months of inventory for single-family houses fell 14.8 percent to 2.3 months from 2.7 months. The number of months indicates how long it would take the current supply of previously owned houses to be sold if no more came on the market.
With inventory waning, sales declined 7.9 percent last month to 221 from 240 in February 2016.
“Sales are really constrained by lack of inventory right now,” John Jacobson, lead real estate analyst at Locations, said in a phone interview. “We would be having more sales if there were more to sell. So the lack of inventory is really contributing to a very competitive market environment.”
As Oahu home prices climb, more prospective buyers are pursuing the less expensive condominium market. Consequently, condo sales jumped 11.7 percent last month to 362 from 324.
“The double-digit increase in condominium and townhome sales reflects buyers’ needs for an affordable alternative to single-family houses,” Lee said.
Despite the jump in sales, condos’ median sales price rose just 1.7 percent last month to $385,000 from $378,444 in February 2016. The $385,000 tied the ninth-highest monthly price for condos. The record median price — the point at which half the prices were above and half below the given price — was $405,500 in June.
“The typical buyer is more in the condo price range, so condos as a market are receiving more price pressure and more demand in general,” Jacobson said. “Competitive marketplace properties are being bid up over their asking price. This is contributing to upward pressure on prices.”
Like single-family houses, inventory for condos is declining.
Active condo listings declined 8.4 percent last month to 1,525 from 1,665, while the months of inventory for condos dropped 17.2 percent to 2.4 months from 2.9 months.
Local economist Carl Bonham said last week that he expects the growth rate in home prices to slow from now through 2019 due to higher mortgage interest rates and slower job and income growth projected for the state.
“But we’re still talking about median single-family home prices over $800,000 by 2019 and condos in the mid-$400,000 range by 2019, ” said Bonham, executive director of the University of Hawaii Economic Research Organization and a UH professor of economics.
For 2016 the median price for single-family houses was $735,000 while condos’ median was $390,000.
Jacobson also expects prices to keep rising.
“We’re estimating about a 6 to 7 percent increase in both (single-family houses and condos) from 2016 to 2017 overall, with the percentage increase higher on condos,” Jacobson said. “We don’t see new inventory coming on board that will have much effect on the tight market conditions.”
