Rising Interest Rates Cause Ripple Effects Across O‘ahu’s Housing Market
According to resales figures released today by the Honolulu Board of
REALTORS®, housing sales volume on O‘ahu declined in June, with single-family home sales down 20.8% and condos dropping 14.2% year-over-year. However, sales volume is still up compared to pre-pandemic 2019 levels, with single-family home sales up marginally at 9.2% and condos well ahead at 32.3%.
The median sales price of a single-family home increased 12.4% to $1,100,000 compared to last June. Condos set a new record for the second month in a row with a median sales price at $534,000, up 16.1% from a year ago and 3.4% above last month’s record of $516,500. Properties continue to move into escrow in under two weeks, though single-family homes spent 10 days on the market in June compared to just eight days last year, and condos remained steady at 11 days on the market.
Despite this quick pace, the volume of contract signings has subsided, with pending sales falling for three consecutive months, declining 27.7% for single-family homes and 24.8% for condos year-over-year.
“The rapid rise in interest rates is causing buyers to change tack and reevaluate their budgets and what they’re looking for in a home,” said Chad Takesue, president of the Honolulu Board of REALTORS®. “New listings are spending more time on the market compared to the frenzy in activity we witnessed last year.”
Regionally, the Diamond Head and Ewa Plain areas experienced the most significant drop in sales volume year-over-year, plummeting 60.9% and 27.1%, respectively. Though still at historically low levels, active inventory rose considerably over the last summer, up 39.8%. The Ewa Plain and Leeward regions more than doubled their active inventory, skyrocketing 194% and 104%, respectively. The majority of single-family homes—roughly 62%—sold above the asking price, which is a slight 6% dip compared to last June. The Leeward and Kāne‘ohe regions accounted for the most significant drop in pending sales, falling 68% and 63%, respectively.
The condo market saw sales in the $700,000 to $1,199,999 price range rise 47.9%, while properties in the $699,999 and below price range contributed to the primary sales decline, down 25.8% compared to a year ago. Active inventory remained down just a tick at 2.6%. The share of condos sold above the original asking price was comparable to last year at approximately 43% vs. 41% in June 2021. Pending sales of condos dropped across all regions and at all price points, with the greatest decline in the Metro region, down 28.8%.
In June, more active inventory of single-family homes and condos saw price reductions compared to last summer. For single-family homes, 30% of the active inventory was reduced from the original asking price, compared to 20% or 74 listings last June. Condos also saw slightly more listings with reduced prices, as 27% or 271 listings had reduced the asking price, compared to 22% or 227 listings in June 2021. Of note, the price reductions may not have occurred in June, but rather this data reflects the active listings that are now priced below their original list price.
“Sellers are also adjusting their strategies in response to market conditions. Over the past several months, we’re seeing more sellers decrease the asking price for their properties for single-family homes and condos,” Takesue added.
New listings declined year-over-year in both markets, dropping 18.9% for single-family homes and 12.5% for condos. Of the new single-family home listings that came on the market in June, more than half—58%—remained in active status, meaning they were available for sale at the end of the month compared to just 38% last June. The same is true for condos, where 58% of the new listings remained in active status compared to 49% in June 2021.
Halfway through 2022, the condo market continues to outperform single-family homes, with condo sales up 7.5% and single-family home sales down 8.8%. Single-family homes priced at $899,999 and below dropped 48%, but condo sales at higher price points rose considerably. Condos sold in the $700,000 to $799,999 price range with double the number of sales as the same period one year ago, and condos in the $800,000 to $899,999 range also saw a notable increase of 94.2%.
“We attribute this distinct shift in sales at certain price points to the shortage of single-family home inventory and the challenge of what families can afford, which likely pushed some buyer demand over to the condo and townhouse market,” Takesue said.
Year-to-date, the median sales price for a single-family home increased 17.0% to $1,111,211, and the median sales price for a condo jumped 13.2% to $515,000. Most sellers received their full asking price or more, which was the case for approximately three out of every four single-family homes sold and three out of every five condos sold. Though there was a 3.8% dip in single-family homes closing above the original asking price, this trend accounted for a slightly larger share of sales this year, 61% versus 58% in 2021. Meanwhile, the number of condos sold for more than the original asking price increased by 40.5%, as did the share of those sales, rising to 43% so far this year compared to 33% last year.
Year-to-date, new listings of single-family homes dipped 5.5%, with the Kāne‘ohe area
experiencing the most significant drop in new listings, down 25%. The condo market saw a marginal 1.1% increase in new listings, with small increases in the Metro and Leeward regions, up 3.1% and 5.8%, respectively). Finally, though the North Shore recorded the smallest share of new listings, the area had the sharpest change over last year with a 93.1% increase in new listings.
(Source: Honolulu Board of Realtors)