O'ahu's housing market closed out 2006 with higher prices from the previous year, but total sales of previously owned homes fell for the first time in a decade and dropped to their lowest level in four years.

The market, cooled in part by buyers unwilling or unable to pay record prices, generated $5.47 billion in sales, a 9 percent decline from $5.99 billion a year earlier, according to Honolulu Board of Realtors data released yesterday.

Industry experts said they expect little change in the market this year, with around the same number of homes selling at prices maybe a tad above or below where they ended 2006.

"It's what I call a neutral market right now," said Jim Wright, president and CEO of Century 21 All Islands.

Last year, single-family homes sold for a median price of $630,000, or 7 percent more than $610,000 in 2005. The median is the point at which half the prices were higher and half lower. For condominiums, the median was $310,000, up 15 percent from $305,000 during the same comparable period.

There were 4,041 single-family homes and 6,380 condominiums sold on O'ahu last year, dropping 13 percent and 17 percent, respectively, from 2005.

Combined, the 10,421 homes sold last year represented the fewest sold since 9,312 in 2002. The combined single-family home and condo sales decline was the first since 1996, though single-family home sales alone fell 2 percent in 2005. Condo sales had not fallen since 1996.

Wright said last year's sales drop was a significant correction of the market but wasn't that bad given that about 9,600 homes were sold during the peak of the late 1980s Japanese investment boom.

"I'm not really fussing about it," he said. "We got going so fast, and it just kept climbing year after year. We were bound to have to do this at some point. There's only so much the market can bear."

Wright said he expects prices to decline around 5 percent and sales to rise by about 5 percent in 2007.

"I think the market had been idling a while, and now (more buyers) are coming back," he said. "I think people who were waiting are starting to move in."

Other observers predict sales will continue to decline this year and that prices will be flat or slightly higher.

"I think we're just going to see more of the same," said Harvey Shapiro, research economist for the Honolulu Board of Realtors. "I think there will be fewer sales. (Prices should) stay near the current levels."

Berton Hamamoto, president of Property Profiles Inc. and the Board of Realtors trade association, said projections for a strong Hawai'i economy and favorable interest rates this year should allow the housing market to sustain 2006 price and sales levels.

"There's nothing on the horizon that should propel the market in a downward spiral," he said. "It's pretty stable right now."

In December, there was some resurgence of buying, as single-family home sales rose 10 percent to 346 from 315 in December 2005. The December median price was $613,500, up 1 percent from $610,000 a year earlier.

The last time sales increased for one month from the same month a year earlier was in May when there was a 2 percent increase.

Shapiro said the December rise could have been for a variety of reasons, including the desire to buy a home before the new tax year.

For condos, December sales were down 16 percent to 458 from 545 a year earlier. The median price was $315,500, up 3 percent from $305,000 during the same comparable period.

It took a median of about 60 days to sell a single-family home or condo last month, which was about twice as long as a year earlier.

Inventory was still higher in December than a year earlier, but declined from November levels. There were 1,846 single-family homes and 2,448 condos available for sale last month, down by about 200 from November but up from 1,542 and 1,961, respectively, a year earlier.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.