New home sales still strong
By Andrew Gomes
Advertiser Staff Writer
Build them and they will sell.
Despite Hawai'i's slowed economy, new homes on O'ahu have continued to sell at a strong pace, with January sales higher than a year ago.
Home developers signed 132 sales contracts at an average price of $331,053 in January, up 12 percent and $59,452, respectively, compared with the same month a year ago, according to a report by Prudential Locations research consultant Ricky Cassiday.
A couple of new projects helped boost the number of sales and the average price, while strong sales during the previous few months also drove up the number of January closings, or completed sales, Cassiday said.
The strength mirrors activity in the existing-home resale market on O'ahu over the past two months. But because real estate tends to lag economic trends, Cassiday and some developers expect sales and prices will flatten out this quarter.
Since Sept. 11, year-over-year increases in new-home sales have slowed from 74 percent in October, to 29 percent in November, to 19 percent in December, to 12 percent in January, Prudential data show.
Yet the addition of new inventory and low interest rates continue to outweigh any negative effects from job losses among residents and fewer tourists coming to Hawai'i.
The busiest project in January was Kai Lani, a project at Ko Olina by Armstrong Builders and Alexander & Baldwin that recently broke ground. Armstrong signed 15 sales contracts at prices between $450,000 and $1.1 million — the most sales at the highest prices, according to Cassiday.
Also driving up the average price of new homes during the month were a few sales of the fee-simple interest in Harbor Court condominiums in downtown Honolulu, he said.
The number of completed sales, which typically trails sales contracts by a couple of months, was up 70 percent to 117. But Cassiday said that was because many sales scheduled to close in December were delayed by developers finishing construction.
Some developers believe that as long as interest rates stay around the current 6.5 percent for a 30-year fixed loan, people will keep up the buying pace. So they plan to keep building.
Schuler Homes has plans to develop two more projects in Hawai'i Kai, one townhome subdivision of 87 units, and 60 luxury single-family homes.
At Castle & Cooke Hawaii, people are buying homes before the company can build models, according to Bruce Barrett, sales and marketing vice president.
"We're selling on plans, which is an indication of the strength of the market," he said. "In the past, you normally wouldn't attempt to sell without having a model complex done."
Barrett said model-home construction began this month for the Heritage at Lehiwa Ridge project in Mililani.
Of 43 units released for sale, 22 have been sold, and eight more are reserved. A third phase of 25 units will be released for sale in April.
"We still see the market continuing to be strong," he said.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
