New home sales fall slightly in June

By Andrew Gomes
Advertiser Staff Writer

New home sales on O'ahu stalled last month, primarily because of limited supply, real estate analysts and developers say. The decline is not expected to last as more homes are built and buyers lock in still low mortgage rates. Advertiser library photo

The dip in the market, however, was generally attributed to supply limitations, and is not expected to be the start of a downward slide in new home purchases, according to market analyst Ricky Cassiday.

"It's a pebble in the road, not a rock," he said. "I think developers are more constrained by supply issues."

The number of sales contracts for new homes last month totaled 198, down 29 percent from 279 in June of last year, according to Cassiday's report for Hawaii HomeLoans.

The decrease was the first since October 2000, when the 110 contracts signed was 24 fewer than the same month the year before, Cassiday said.

Bruce Barrett, sales and marketing vice president for Castle & Cooke Hawai'i, the state's largest home builder, said the company has been trying to release more homes for sale but still is challenged to keep up with demand.

Last month, Castle & Cooke contracted to sell 50 homes, down from 57 in June 2002. "That just tells me I just didn't release enough product," Barrett said. "The market hasn't changed."

Barrett said the company is releasing homes for sale six to seven months before their estimated completion, and is on track to deliver 650 homes this year compared with about 500 last year — a 30 percent increase.

Cassiday said the number of new-home contracts on O'ahu during the first half of the year is up 38 percent, from 1,027 to 1,419, and represented the largest January-June increase in seven years.

Castle & Cooke reported purchase contracts for the first half of the year are up 16 percent, with completed sales up 24 percent.

The company's Havens of I'i Vistas II townhome project in Mililani was the top seller in June with 13 sales. The best-selling multifamily project for the six-month period was Hokua Tower in Kaka'ako where developers The MacNaughton Group and Kobayashi Group reported 236 contracts.

The best-selling single-family project for the first half of the year was Castle & Cooke's Gallery Homes with 90 contracts.

Home construction has been one of the main drivers of Hawai'i's economy in recent years, creating jobs for thousands of construction workers, and driving business for lenders, real estate appraisers, architects, materials suppliers and other related fields.

Recent rises in interest rates are not expected to slow sales, according to Barrett, who said an uptick in rates often spurs purchases by consumers wanting to beat further possible rate hikes.

"You would expect a surge in activity," he said. "There is so little supply and interest rates are still relatively low historically."

The average asking price for a new home on O'ahu in June rose to $399,187, up from $356,016. For the first six months of the year, the average price was $400,456, up from $344,530.

Cassiday said the higher prices in combination with higher interest rates could affect sales in the long term if rates continue to rise. "You might get some resistance there," he said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.