Hawaii’s housing market appears to be heating up for the spring buying season with the median price for single-family homes climbing above the $1 million threshold again.

Single-family resales fetched $1,109,000 in May, up 10.9% from $999,995 in April and down just 3.9% from the record $1,153,500 in the year-earlier period, according to data released Tuesday from the Honolulu Board of Realtors. It was only the second time in the past five months that the median price has reached seven figures.

“There’s such a limited supply that we’re seeing multiple offers on a larger percentage of the properties,” said Mike James, president of Coldwell Banker Realty in Hawaii. “It has pushed prices up a bit. I think there was a phase where buyers went through a shock with rising interest rates, and now they’ve kind of adjusted. Until the inventory improves, I think prices are going to be, at worst, stable as they continue notching up as they have.”

More single-family home sales closed at the full asking price or greater than in the past seven months. About 45% of single-family homes received the full asking price or more in May. Condominium sales also closed at 45% or more of the full asking price.

A year ago bidding was more competitive with about 75% of single-family home sales closing at or above the full asking price and about 65% of condo sales closing at or above the asking price.

The median price for condos, meanwhile, hovered just above the half-million-dollar mark in May. Condo sales inched up 1% in May to $505,000 from $500,000 in April but slipped 2.2% from $516,500 in May 2022. The record price for condos was $536,000 in March. The median price means half the prices were above and half below the given price.

James said a few months ago the lower-end price point of the market was struggling, but now it’s come back due to low inventory with fewer buyers in the market competing and pushing up prices.

“I was kind of surprised (the median single-family home price) rose as much as it did, but the fact is we’re seeing multiple offers,” he said. “At an office meeting this morning, we announced 20 sales, and I bet out of the 20, 13 or 14 went over the asking price.”

Sales have languished due to rising interest rates that make it tougher for prospective homebuyers to qualify for purchases. But single-family home sales picked up momentum in May as they jumped 26% to 262 from 208 in April but still fell 23.8% from 344 in the year-earlier period. The Ewa Plain recorded the largest share of single-family home sales in May on Oahu at 25.6%, or 67 sales.

Condo sales also improved over the month, rising 4.3% to 438 from 420 in April. Like single-family homes, however, condo sales declined from the previous year and were off 36.3% from 688.

“Despite lower sales volume, the median prices for O‘ahu properties haven’t changed much over the past year,” Honolulu Board of Realtors President Fran Villarmia-Kahawai said in a statement. “Lack of inventory continues to drive demand as more kamaaina strive to become homeowners.”

There were only 2.2 months of active inventory in May for single-family homes, meaning that if no additional homes were added to the supply, the inventory would be gone in 2.2 months given the current sales pace. A balanced market typically would have somewhere between four and six months of supply. In May 2022 there were 1.3 months of inventory.

For condos there were 2.6 months of active inventory in May, compared with 1.5 months a year earlier.

Even with low inventory, single-family homes and condos were on the market twice as long as they were a year ago at a median 21 and 20 days, respectively, compared with 10 days for each in 2022.

The average 30-year mortgage rate climbed last week to 6.79%, its highest level since hitting 7.08% in early November. A year ago the rate averaged 5.09%.

“There’s continued demand in the market, and there’s also signs that buyers have been accepting of the 6.5% interest rate,” said John Jacobson, lead real estate market analyst for Locations. “The summer typically carries a swell in activity, and we’re seeing some of that. I think there was some initial hesitation with the higher rates and how quickly they moved. That caused some concern.”

Jacobson said it remains to be seen whether homebuyers will stop or pause if the 30-year rate hits 7%.

”We know there’s still plenty of demand in the market, and home prices are showing it,” he said. “They’re lower than last year but they’ve leveled off, and May was so far the highest this year.”

HOME SALES

The number of homes sold on Oahu in May, with the median price and percentage change from the same month in 2022:

HOMES

SALES MEDIAN PRICE

May 2023 262 $1,109,000

May 2022 344 $1,153,500

Change -23.8% -3.9%

CONDOS

SALES MEDIAN PRICE

May 2023 438 $505,000

May 2022 688 $516,500

Change -36.3% -2.2%

Source: Honolulu Board of Realtors