Home prices are expected to continue to rise because of limited inventory, strong demand and attractive interest rates.

But it was the second consecutive month of lower single-family home transactions compared with the previous year, and some real estate industry leaders believe the end to the expansion cycle is setting in.

"I think the number of single-family (home) transactions has probably peaked," said Herb Conley, co-managing director for Coldwell Banker Pacific Properties. "I don't think it'll keep going up."

According to the Honolulu Board of Realtors, which released the February home resale statistics yesterday, there were 266 single-family home sales in February, down 9 percent from 293 a year earlier. The 266 February sales level was also just under the 269 sales in February 2003.

The 9 percent drop last month was a widening of January's nearly 3 percent decline. The last time there was a greater decline was September 2001 when sales fell 11 percent.

Despite the decline, the overall market remained strong, driven by weightier growth of condominium sales.

February condo sales totaled 525, up 17 percent from 449 a year earlier. The condo price median, which is a midpoint where half the sales were for more and half for less, was $235,000. That was also a record, and was up 25 percent from $188,000 a year earlier, or 5 percent higher than $224,000 in January.

Harvey Shapiro, research economist for the Board of Realtors, said more people are buying condos because they are increasingly priced out of the single-family home market.

Ikaika Kincaid, a married, 31-year-old ocean engineering student at the University of Hawai'i, said he feels lucky to have found a "fixer-upper" single-family home for $395,000.

"It is discouraging for a young couple to find something out there that is affordable," he said.

Kincaid, whose wife, Elizabeth, is six months pregnant, said he rushed to make the first offer on the Kalihi Valley home even though his wife had yet to see it, and established a connection with the seller who appreciated the young couple's effort to establish a family and homeownership.

The sale closed Monday. "We really got lucky," he said. "It's one of those things — it's all about timing nowadays."

Shapiro said inventory is low relative to historical levels, which should keep pressure on prices to move up.

"This tight inventory of listings will probably result in buyers pushing prices even higher as they vie for the limited number of properties on the market," he said.

At the end of last month, there were 858 single-family homes on the market, about what was available a year earlier but 10 percent lower than January. Condo inventory was 1,202, up from 1,187 a year earlier but down from 1,378 in January.

Conley agreed that single-family prices will almost certainly continue rising.

Still, Conley and Shapiro said prices remain more affordable today than they were at the peak of the Japanese real-estate investment bubble in 1990 considering interest rates, which are lower today, and home prices and income that are higher today.

Bank of Hawaii chief economist Paul Brewbaker two years ago said that in a few years a $600,000 single-family home could still be considered affordable for a median-income family with 3 percent annual income growth and a 7 percent interest rate.