Sales of existing O'ahu single-family homes decreased last month, after two consecutive increases.

Eight fewer homes sold on the island last month, representing a 3.1 percent decline to 247 sales from 255 in August 2008, according to the Honolulu Board of Realtors.

The decline was the smallest this year and compares with declines that ranged from 10.7 percent to 46.5 percent until a 9.5 percent gain in June was followed by a 5.6 percent gain in July. The increases were the first year-over-year gains for any month in two years.

The median home price, which is the point at which half the sales were for more and half for less, fell 10.9 percent to $566,000 in August from $635,000 a year earlier.

The University of Hawai'i Economic Research Organization, in a March report, predicted that the median price for a single-family home price on O'ahu will fall 9 percent this year, 4.9 percent next year and 0.6 percent in 2011.

As of August this year, the median single-family home price is down 9.4 percent, to $570,000.

Sandra "Sam" Bangerter, president of the Honolulu Board of Realtors and co-owner and principal broker of RE/MAX Kai Lani in Kailua, said she believes the bottom of the market, in terms of volume, has been reached.

"There is new energy in the market, as many sellers are seeing multiple offers on properties that are well priced," she said.

In the condominium market, sales were up 1.7 percent, to 351 last month from 345 a year earlier.

The last time condo sales rose year-over-year was in March 2006.

However, the median condo sale price in August fell 11.6 percent, to $290,000 from $328,000 a year ago.

The last time the median was as low was in October 2005.

For the first eight months of this year, the condo median price was $305,000, down 7.6 percent from the same period last year.

UHERO projects the median condo price will decline 8.5 percent this year, 10.4 percent next year and 7.2 percent in 2011.

In O'ahu's real estate market downturn during the 1990s, sales of single-family homes and condos consistently increased for five years before the annual median price rose.

There have been some early signs that the local economy may be on the verge of improving, but unemployment is expected to continue rising and personal income is expected to be flat this year.

Also, several thousand state workers may be forced to accept wage cuts, furloughs and perhaps layoffs.

Other factors that aren't favorable to the housing market are rising home foreclosures and tighter lending standards.

Some observers believe some of the demand for homes stems from an $8,000 tax credit offered by the federal government to help stimulate first-time home buying. The program began in January and lasts until Dec. 1.

O'ahu home sales began sliding four years ago. Last year, single-family home median prices decreased, subsiding 3 percent.

In the 1990s, single-family home median price declines ranged from 2.4 percent to 8.4 percent between 1995 and 1999.

Harvey Shapiro, economist for the Honolulu Board of Realtors, said a relatively tight inventory of homes for sale is helping keep median price declines lower than the 20 percent to 30 percent declines some Mainland cities have experienced in the past year or two.

Last month on O'ahu, there were 1,624 single-family homes for sale. That was the lowest level for any August since 2005, near the peak of the market, when inventory was at 1,060. Inventory in August 2008 was 2,119 homes, and has ranged between 1,653 and 1,928 during the first seven months of this year.

If no new homes were added to the market, it would take 6.1 months to sell the current inventory, which is down from 8.4 months a year earlier, 6.5 months in July and — a high for any month this year — 15.8 months in February.

A level of six to 10 months of remaining inventory is generally considered to be the range where pressure on prices tends to be balanced.

"It's not strictly a seller's market," said Chason Ishii, president of Coldwell Banker Pacific Properties. "We see the market transitioning."

Condo inventory last month was 2,140 units, which was the lowest for any August since 2005, when there were 1,097 condos for sale. Inventory in August 2008 was 2,743, and has ranged between 2,279 and 2,582 earlier this year.

Months of remaining inventory for condos was 6.5 months, which compares with 7.5 a year earlier, 7.8 in July and a high for any month this year at 16.1 in March.