Hale Kamaole is seen on Saturday afternoon. Kihei was the most popular market for condos sold in Maui County in February, with 28 units selling for a median price of $865,000. The Maui News / MATTHEW THAYER photos

As housing prices remain high, sales are falling to levels that one of Hawaii’s top economists says the state hasn’t seen since the Great Recession over a decade ago.

The median sales price for a condominium in Maui County reached $908,000 in February, the highest it’s been since the Realtors Association of Maui started keeping track in 1993, while the median sales price for a single-family home was $1,076,500.

While the median price for homes was down slightly by 2.1 percent from February 2022, condos have become more expensive, rising in price by 24.3 percent from February 2022. Condos were pricey even by recent standards — from March 2022 to February 2023, the median price for condos was $800,000, according to a recent Realtors Association of Maui report.

“With buyer demand down from peak levels, home price growth has continued to slow nationwide, although prices remain up from a year ago,” the report said. “Sellers have been increasingly cutting prices and offering sales incentives in an attempt to attract buyers, who have continued to struggle with affordability challenges this winter.”

The slight decline in mortgage rates earlier this year convinced some buyers to come off the sidelines, but with rates ticking up again in recent weeks, buyers are once again pulling back, causing sales activity to remain down heading into spring.

Kamaole Sands (left) and Hale Kamaole bracket a crystal clear Haleakala Saturday afternoon in Kihei, one of the most popular markets for condos on Maui. The median sales price of $908,000 for all condos sold in Maui County in February was the most since the Realtors Association of Maui started keeping records in 1993.

In February, there were 70 new listings for single-family homes in Maui County, which was down 45.3 percent compared to the same month in 2022 when there were 128 new listings.

New listings for condominiums were also down significantly by 55.6 percent, with 84 in February, compared to the 189 new condo listings in the same month in 2022.

In total, 44 single-family homes were sold in Maui County last month, down 50 percent from the 88 sold in February 2022.

“On all the islands, for each county, sales of single-family homes have fallen,” Carl Bonham, executive director of the University of Hawaii Economic Research Organization, said during a news conference Thursday on UHERO’s economic forecast. “These were very elevated because, during the pandemic with people needing a place to Zoom and taking advantage of low-interest rates and all the other factors that were at play there, sales were very, very elevated.”

The same could be said for condominium sales, which have fallen nearly 60 percent year over year, with only 66 sold in February compared to the 162 that were sold in Maui County in February 2022.

For single-family homes, the number of closed sales in February was the lowest in any single month over the past year; for condos, it was the second lowest.

Bonham said that housing sales volumes in all counties “are getting close to where they were at the bottom of the Great Recession, which was a financial crisis largely driven by the housing bubble.” 

“We’re approaching that small of a number of transactions. So what does that do? Those are resales, so it’s not new homebuilding,” he said. “But new homebuilding is facing the same kind of drop in demand, which if it were to continue could translate into less homebuilding, right? Which in the near term could translate into less job growth, less demand for construction workers. And then longer term a bigger problem is the housing shortage.”

There’s a lot of activity that happens when homes are changing hands, he noted, and all of that is down to levels that haven’t been seen since 2009, Bonham said.

In December 2007, at the start of the Great Recession, 87 single-family homes sold in Maui County, according to RAM records. Monthly home sales fluctuated in 2008 and dropped as low as 31 in January 2009, before slowly building back up to 90 sales in December 2009.

Bonham and other economists have warned of a coming recession but have also pointed to the stronger-than-expected U.S. economy as reason to push back recession predictions.

While new home and condo listings and sales are down, inventory in Maui County, which has historically been declining, saw a boost last month. Inventory increased from February 2022 by 21.6 percent for single-family homes, with 281 actively for sale, and by 36.4 percent for condominiums, with 225 actively for sale.

Days on the market decreased 12.1 percent for single-family homes, but increased 21.6 percent for condominiums compared to last year.

For single-family home sales in February, most occurred in Kahului, which had a total of nine sales with a median sales price of $1,074,000. The second-highest number of single-family homes sold in Maui County was in Wailuku, where eight sold with a median sales price of $872,000. Five homes sold in Haiku with a median sale price of $1.7 million.

Some of the higher-priced regions included the Makawao/Olinda/Haliimaile area, where one home sold for $3.7 million. One home sold in Kaanapali for nearly $3.6 million and another sold in Wailea/Makena for about $3.2 million.

For condominiums, the most expensive units sold in February were in the Wailea/Makena area with a median sales price tag of just over $2 million for the five units sold.

Kihei had the most condos sold with 28 units for a median sales price of $865,000.

Nationally, interest rates continue to rise as the government tries to curb inflation. The Federal Reserve raised its benchmark interest rate in February by a quarter-percentage point from 4.50 percent to 4.75 percent, its eighth rate hike since March of last year when the interest rate was nearly zero, the report said.

Mortgage interest rates have dipped slightly from their peak last fall, leading pending sales to increase 8.1 percent month to month, but affordability constraints continue to limit homebuyer activity overall, with existing-home sales declining for the 12th consecutive month, according to the National Association of Realtors.

Falling home sales could be one of the reasons why Hawaii’s economy might be seeing tax revenues grow more slowly than anticipated, Bonham said.

“If transactions aren’t happening there’s no tax revenue there, so this is really all the result of interest rates,” Bonham said. “It’s actually what the Fed’s trying to do. They’re trying to get us to stop buying homes and stop buying cars and stop buying anything that we have to finance because that’s what they control, and if they can get us to stop buying these things, it will reduce demand for labor and it will reduce wage growth and it will reduce inflation.”

He said while raising rates is working, it’s “clearly not” working enough.

* Dakota Grossman can be reached at dgrossman@mauinews.com. Managing Editor Colleen Uechi contributed to this report.

Hale Kamaole is seen on Saturday afternoon. Kihei was the most popular market for condos sold in Maui County in February, with 28 units selling for a median price of $865,000. The Maui News / MATTHEW THAYER photos Kamaole Sands (left) and Hale Kamaole bracket a crystal clear Haleakala Saturday afternoon in Kihei, one of the most popular markets for condos on Maui. The median sales price of $908,000 for all condos sold in Maui County in February was the most since the Realtors Association of Maui started keeping records in 1993.

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