Whats Going on
The housing market in Hawaii, like the rest of the United States, has experienced a roller-coaster ride in recent months. Existing-home sales in February marked a significant turning point, reversing a 12-month decline and registering the largest monthly percentage increase since July 2020. In this blog, we will discuss the current state of the housing market in Hawaii, examine the factors contributing to its fluctuating trends, and provide an overview of the future outlook.
Hawaii's Housing Market: Current Trends and Developments
The existing-home sales in February jumped 14.5% from January, with a seasonally adjusted annual rate of 4.58 million. However, year-over-year, sales fell by 22.6%. The increase in sales indicates that home buyers are conscious of changing mortgage rates and are seizing opportunities to take advantage of any rate declines. Additionally, stronger sales gains have been observed in areas where home prices are decreasing, and local economies are adding jobs.
Total housing inventory at the end of February stood at 980,000 units, identical to January and up 15.3% from one year ago. Despite the increase in inventory, unsold inventory remains at a 2.6-month supply at the current sales pace, which is historically low. This has resulted in multiple offers on a significant number of properties.
The median existing-home price for all housing types in February was $363,000, a decline of 0.2% from February 2022. This ends a streak of 131 consecutive months of year-over-year increases, the longest on record. Properties typically remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022.
First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022. All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022.
What Does the Future Hold for Hawaii's Housing Market?
According to the National Association of REALTORS®, the economy is expected to continue adding jobs throughout 2023 and 2024, with the 30-year fixed mortgage rate steadily dropping to an average of 6.1% in 2023 and 5.4% in 2024.
With an improving interest rate environment and job gains, annual existing-home sales are projected to drop 11.1% in 2023 before jumping 17.7% in 2024. Home sales activity is expected to bottom out in the first quarter of 2023 before incremental improvements occur.
Home prices are predicted to remain stable in most parts of the country, with a minor change in the national median home price. The national median home price is expected to decrease by 1.6% in 2023 before regaining positive traction of 3.1% in 2024.
The housing market in Hawaii, along with the rest of the United States, has experienced a period of fluctuation. However, recent trends indicate a reversal in existing-home sales, and future projections suggest an improving interest rate environment and job gains. While home sales activity is expected to bottom out in the first quarter of 2023, incremental improvements are predicted to follow, leading to a more stable and flourishing housing market in the years to come.
In Hawaii
In the month of March, the real estate market on the Big Island of Hawaii showed significant fluctuations across different property types and regions. The sales volume in the residential sector saw a decrease of 63.43%, falling from $246,337,036 in the previous year to $90,078,278. The vacant land sector experienced a more drastic drop of 68.90%, from $71,845,241 to $22,347,186.
Commercial and multi-tenant facility (MTF) properties also witnessed a decline, with a 100% decrease in sales volume from $5,239,000 in the previous year to no sales this year. Condominium sales decreased by 64.21%, from $94,745,614 to $33,904,880, while there were no business property sales recorded.
Different regions on the Big Island displayed varied performances. Puna’s residential sales volume declined by 53.64% and vacant land sales by 51.36%. South Hilo experienced a 61.83% decrease in residential sales and a 77.63% decline in vacant land sales. North Hilo saw a 100% drop in residential sales, while vacant land sales decreased by 82.19%.
In the Hamakua region, residential sales fell by 12.80% and vacant land sales by 17.22%. North Kohala’s residential sales volume decreased by 68.71%, and vacant land sales dropped by 22.63%. South Kohala witnessed a 52.64% decline in residential sales and a 74.65% drop in vacant land sales. Lastly, North Kona’s residential sales volume fell by 72.70%, while vacant land sales experienced a decrease of 83.24%.
These statistics highlight the substantial changes in the Big Island’s real estate market during the month of March, with different property types and regions displaying varying trends.
What Next?
Based on the current data and trends observed in the real estate market in Hawaii, we can predict some potential future trends for the upcoming months and years. It is essential to note that these predictions are not guaranteed and are subject to various external factors, such as economic conditions and governmental policies.
Residential and Vacant Land Property Demand: We have observed a decrease in the sales volume for residential and vacant land properties across the different regions of Hawaii. This trend might continue in the short term as buyers may remain cautious due to economic uncertainty or potential changes in interest rates. However, as the economy stabilizes and adapts to the new conditions, we may see an increase in demand for these properties, particularly in areas with attractive investment potential or favorable living conditions.
Condominium Market: The sales volume for condominiums has also experienced a decrease across various regions in Hawaii. However, some areas, such as North Kona, show a smaller decrease compared to others. This may indicate that the condominium market in specific regions may recover more quickly, driven by factors like affordability and a preference for low-maintenance living options.
Commercial/MTF and Business Properties: These property types have shown mixed trends, with some regions experiencing a decrease in sales volume, while others have remained relatively stable or even increased. This may suggest that the commercial and business property market is more resilient to economic changes, or that specific industries or regions are driving demand in these sectors.
Regional Variations: It is essential to consider that real estate trends will vary from one region to another, as each area has its unique characteristics, industries, and demographics. For example, North Hilo, Hamakua, and North Kohala have shown increases in some property types, while other regions have experienced decreases. This highlights the importance of conducting in-depth regional analysis when predicting future trends.
In conclusion, while the data indicates a decrease in sales volume across most property types and regions, it is essential to consider regional variations and the potential for market recovery as economic conditions stabilize. Investors and buyers should closely monitor market trends and consider local factors to make informed decisions about property investments in Hawaii.
papakeacollection
March 10, 2026
About the Author
James T. Morrison, R(S)
James T. Morrison is a Realtor with Knutson & Associates, and part of the Papakea Collection Sales Team. You can email him directly at JTM@Jamesmorrisonhawaii.com or call or text him directly at (808) 339-8249
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