Oahu’s finite amount of available island land on which to build, and historically limited inventory of homes for sale has long been the fundamentals for the island’s relentless housing demand, sustained rise in prices, and a prolonged seller’s market.

But, in July, there was a much-needed inventory relief for frustrated buyers. Active single-family inventory increased 38.8% — from 415 homes for sale in July 2021 to 576 last month. And active condo inventory jumped from 969 listings in July 2021 to 1,050. These higher active-inventory counts hint that a more buyer-friendly market is emerging — a welcome change — for buyers left frustrated by months of slim pickings.

“Fewer buyers and less competition equal more price reductions and fewer sales — good news for buyers,” says Mike James, president of Coldwell Banker Realty. “And sellers are happy too because while sales volume figures are down from a year ago, when we compare last month’s closed sales volume to pre-pandemic 2019 figures, they are about the same — the market remains strong. Prices are also trending up — Oahu condos set another record month in July.”

But even with some price reductions, and less competition, and more inventory, some buyers are struggling with the effects of higher mortgage interest rates. A year ago, July 2021, 30-year term mortgage rates were below 3% — under 2.5% in some cases. Today, rates are consistently above 5% and moving higher, meaning the same house costs more money each month — causing borrowers to reevaluate what they can afford. The higher rates are literally knocking some buyers out of the game completely.

“So, the market is a bit more buyer-friendly for those who can still qualify for a sufficient mortgage,” adds James. “But some buyers may be forced out of the market — that’s how impactful interest rates can be. And that may also account for last month’s slowing sales volume. When mortgage money gets tight, the qualified-buyer pool shrinks, and sales slow.”

The “big picture” market indicators are positive: Median sales prices are up. Active inventory is trending up. Most sellers are receiving full list price — some higher. Homes are selling very quickly. Median days on the market, while slightly more than a year ago, is still very low.

Sales of Single-Family Homes and Condos | July 2022
Source: Honolulu Board of REALTORS®, compiled from MLS data