Sales, prices rise for new homes on O'ahu
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Chart: New home sales on O'ahu
By Andrew Gomes
Advertiser Staff Writer
Residential developers continued to sell more new homes on O'ahu last month at higher prices, completing a strong year for home builders in Hawai'i's main market.
Bloomberg News Service
Lower interest rates, which ratcheted down throughout most of the year, helped drive market strength, while several new residential subdivisions around O'ahu, including several high-end projects, helped fuel increased sales at higher prices, analysts said.
A roofer helps construct a house on the Mainland, where sales of new homes reached an all-time high last year. Annual sales reached 900,000 homes in 2001. The industry also did well in Hawai'i, where O'ahu developers signed 1,740 sales contracts for 2001, a 9 percent increase from the year before.
The performance mirrored the industry on the Mainland, where sales of new homes reached an all-time high last year as the country slid into recession.
For the year, O'ahu developers signed 1,740 sales contracts, a 9 percent increase from 1,597 in 2000, according to data compiled by Prudential Locations research consultant Ricky Cassiday.
The number of completed sales, which generally trails new contracts by a few months, also was up last year to 1,611, an 11 percent increase from 1,454 in 2000.
The average sales price rose 7 percent to $287,680 — the highest in at least five years. The project with the most completed sales last year was the Islands project in Kapolei by Haseko Homes, according to Cassiday.
For December, home builders signed 105 sales contracts, up 19 percent from 88 contracts in December 2000.
Completed sales totaled 175, down 14 percent compared with 204 for the same period in 2000, but Cassiday said that was because many closing dates were pushed back to this month because homes were finished late.
The December price average spiked 19 percent to $320,337, compared with $268,655 in December 2000.
According to Cassiday, an influx of high-end projects such as The Coconut Plantation at Ko Olina, The Legacy in Mililani and several in Hawai'i Kai boosted the new home average price on the island by almost $52,000.
But it has been the strong number of sales that has been more impressive to Cassiday. "The sales is what blows my mind," he said. "How do you keep writing contracts when the resale market is getting kind of thin? It's just remarkable."
Bruce Barrett, sales and marketing vice president for Hawai'i's largest homebuilder Castle & Cooke, said the company signed 38 new sales contracts in December, up 52 percent from 25 last December.
For the year, the company closed 525 sales, up 17 percent over 449 in 2000. "It was not remarkable growth, but it was steady and it slightly exceeded our projections," he said.
There were some buyers who hesitated on purchases because of uncertainty following Sept. 11, but there were backup buyers to take their places, Barrett said.
Bob Brant, president and chief executive officer of Gentry Homes, said some buyers canceled contracts following Sept. 11, but at about the same rate as the previous year, an indication that layoffs did not hurt new home sales.
December contracts for Gentry slowed somewhat, but closings did not, Brant said, adding that he feels good about continuing strong sales as long as interest rates stay relatively low.
Cassiday said he expects that job losses, which mostly have affected the low end of wage earners primarily in the tourism industry, will translate to weakness in the low end of the housing market, affecting projects in Kunia, 'Ewa and Kapolei.
Prices should begin to come down in the next few months as developers try to keep demand strong as economic weakness persists, Cassiday said.
Barrett at Castle & Cooke said he expects business to be flat for the next few months. "We're not looking for any growth, and we're hopeful that we won't see any downturn," he said.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
