Mild weakness in O'ahu's housing market continued last month with a 3.1 percent decline in the median sale price of previously owned single-family homes to $620,000, from $640,000 a year earlier.

The small drop was the sixth in seven months this year, according to the Honolulu Board of Realtors. If the trend continues, O'ahu's housing market will record its first single-family home median price decline since 1999, when there was a 2.4 percent dip to $290,000.

Still, the slight erosion in prices this year pales in comparison with many markets on the Mainland — particularly cities in Florida, Nevada and California — suffering double-digit drops.

The soft landing for Hawai'i's largest housing market was anticipated by local economists, citing the state's stable personal income, low unemployment, relatively few foreclosures and new home construction limited by land and development rule constraints. Interest rates also remain attractive.

The University of Hawai'i Economic Research Organization in March forecast a 3.2 percent decline this year in O'ahu's median single-family home price, followed by a 2.3 percent decrease next year.

UHERO also predicts the median sale price for previously owned condominiums will dip 1 percent this year and 2.8 percent next year.

In July, the median condo price was down 1.5 percent to $329,900 from $335,000 a year earlier. That was the second decrease this year after a 1.9 percent decline in June. But for the first seven months of the year, the median condo price is still up 1.5 percent from the same period last year.

The main factor putting downward pressure on O'ahu home prices has been a big slowdown in the number of sales, which for single-family homes began in 2006 with a 12.5 percent decline that has widened to a 25.7 percent drop this year through July.

Last month, there were 251 single-family home sales, down 26 percent from 339 in the same month last year.

Prospective buyers also are contending with news of slowing growth of the local economy and a growing number of Hawai'i companies announcing layoffs.

Dana Chandler, president of the Honolulu Board of Realtors and broker-in-charge at Hawaiian Island Homes Ltd., said buyers may be more cautious with the current state of the economy, but that hasn't shocked O'ahu's housing market.

"Honolulu continues to provide a stable environment for both buyers and sellers," she said.

NO BIG PRICE CHANGES

Harvey Shapiro, research economist for the trade association, said sellers may have to make more concessions in the softer market, but prices are staying close to last year's levels.

"This year is going to be a slow but healthy year for real estate," he said. "If you're expecting prices to go back to the $300,000 level, you're dreaming."

Last month, the median time homes spent on the market before selling was 52 days for single-family homes and 42 days for condos. That compared with 37 and 35 days, respectively, a year ago.

Inventory, however, was up only modestly last month to 2,087 for single-family homes from 1,818 a year earlier. Condo inventory was 2,753 last month, up from 2,315 in the same comparable period.

REMAINING INVENTORY UP

At July's sales pace, it would take nine months to sell every single-family home listed on the market. That's up from 5.4 months a year earlier, but is within the six to 10-month range where prices tend to remain more or less flat, according to Shapiro and local economist Michael Sklarz.

Months of remaining inventory for condos last month was 7.8, up from 4.2 a year earlier.

Some observers caution not to read too much into the median price, which is a point at which half the sales were for more and half for less, because the median can be swayed by the mix of homes sold as opposed to the inherent value of property.

However, it's not hard to find homes that sold this year for less than they did a year or two ago. For instance, property records show a three-bedroom Waimanalo house built in 1952 sold last month for $549,000 after selling for $559,000 in August 2007. A four-bedroom Kapolei house built in 1994 sold last month for $455,000 after selling for $505,000 in April 2006.

On the other hand, there are still homes selling for more than they did a year ago, such as a three-bedroom Pearl City house built in 1958 that sold last month for $575,000 after selling for $530,000 in December 2007.

Generally by neighborhood, median single-family home prices among 17 regions on O'ahu tracked by the Board of Realtors were down in 11 and up in six over the first seven months of this year.

In O'ahu's biggest market, the 'Ewa Plain, the median price was down 8.9 percent this year through July. By contrast, the median price in Pearl City-'Aiea was up 6.3 percent in the same period.