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Home sales slow in October

LIHU‘E — A steep rise in mortgage interest rates over the last year continued to wreak havoc with housing markets across the country, including Kaua‘i, where home sales slowed to a crawl in the first full month of fall.

The number of single-family homes that exchanged ownership plunged to 29 in October from 49 in October 2021, according to monthly data pooled from multiple sources by the Hawai‘i Association of Realtors in Honolulu. That marked a decrease of 40.82 percent in the period.

At the same time, the median price of a single-family home slipped to $995,000 from $1 million.

“Log jam. The number of homes for sale has stayed at 125 homes for the whole island for months and months and months,” said Jimmy Johnson, broker in charge at RE/MAX Kaua‘i. “People don’t want to sell because they have to turn around and buy. They have to pay double for the loans.”

Johnson was referencing mortgage interest rates, which have more than doubled in the last year.

The 30-year mortgage, which is the most popular financing vehicle for homebuyers, weighed in at 6.61 percent for the week ended Thursday, Nov. 17, according to mortgage giant Freddie Mac. That was up from 3.10 percent in the same period last year.

The 15-year-rate, which is widely used by homeowners to refinance their loans, came in at 5.98 percent for the week ended Thursday, Nov. 17. That was up from 2.39 percent in the same period a year earlier.

Those rate hikes can add hundreds of thousands of dollars to the cost of financing a home over the course of a loan, depending on the purchase price.

On the bright side, the most recent mortgage interest rate readings were well below previous levels, suggesting rates may have plateaued for the time being. The 30-year rate was down 0.47 percent from the same time last week.

“Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked,” said Sam Khater, Freddie Mac’s chief economist, in a statement.

“While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market. Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact,” Khater said.

The local condominium market also felt the sting of higher mortgage rates, as sales decreased to 34 in October from 41 in October 2021. That marked a decline of 17.07 percent.

But that drop in sales activity did nothing to cool the median price of a condo, which leaped to $764,950 from $540,000 in the same period. That was up 41.66 percent.

“That’s just supply and
demand,” said Val Pilaria,
owner-broker of Aloha Kaua‘i Properties in Po‘ipu, on the market forces that created the hike in the median price for condos last month.

Pilaria said about two months ago she went into the island’s real estate database to do a search for condos, and only found one for sale on the whole south side.

“Not that much for sale,” she said.

The real estate picture was similar across the four major counties in Hawai‘i, with all showing declines in single-family home and condo sales last month. All told, sales of single-family homes sank to 511 in October from 800 in October 2021. That marked a decrease of 36.13 percent.

At the same time, the median price for a single-family home rose to $901,500 from $852,500, or up 5.75 percent.

Sales of condos dropped to 597 in October from 862 in October 2021. That was down 30.74 percent. In the same period, the median price climbed to $648,738 from $566,875. That was up 14.44 percent.

Looking ahead, the Kaua‘i housing market should continue to tread along similar territory as 2022 comes to a close.

“Status quo through the end of the year,” Johnson said.

•••

Wyatt Haupt Jr., editor, can be reached at 808-245-0457 or whaupt@thegardenisland.com.
Source: The Garden Island

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