The calming of O'ahu's housing market continued in January as prices maintained relative stability, and buyer demand weakened for a fourth straight month.

Sales dropped despite a dramatic increase in inventory that has given buyers more homes to choose from. But some industry observers believe that many prospective buyers are holding out, hoping prices will remain flat or perhaps fall.

Sales of single-family homes fell 9 percent last month, compared to the year before. Inventory swelled 64 percent. Condominium sales fell nearly 12 percent despite a 54 percent growth in the number of units on the market.

"There seems to be more of what I would want now," said 'Ewa Beach resident Jediah Bishop, who just started shopping for a new home. He said there are more properties to choose from now than when he bought a home in Mililani — which he has since sold — in late 2004. "The prices are worse, but the selection is better."

"I've looked at the same page for the last week and (the homes on the market) seem to be still there. That's good. That means that gives me the freedom to possibly offer something a little bit lower than what they're asking, which would be nice."

Home prices last month remained relatively stable.

Single-family homes sold last month for a median price of $615,000, which was up $5,000 from December and compared with $505,000 in January 2005, according to the Honolulu Board of Realtors.

The median sales price for condominiums was $295,000, down $10,000 from November and December. A year earlier, the median condo price was $224,000.

In January, 303 single-family homes were sold, down from 333 a year earlier. Condo sales totaled 504, compared to 570 a year earlier.

Last month there were 1,578 single-family homes on the market, compared to the 961 available a year earlier. Condo inventory was 2,125 units, up from 1,378.

Melanie Long, an agent for Dower Realty since 1999, said the frenzied pace of home sales has abated, but the desire to buy is still strong.

"Because the inventory is up, people aren't moving as quick to decide which one to buy, but there are still a lot of buyers," she said. "Now they feel that there's a little more time to actually decide.

"Although it might seem slower and there's a lot more on the market, it just makes the buyer feel pretty good because they've actually got some choices."

Harvey Shapiro, research economist for the Honolulu Board of Realtors, said the increasing inventory is just a normal part of the business cycle.

"We had an extremely low inventory for a few years and now it seems like it's starting to be restored," he said. "We're still at relatively low levels, but it is definitely higher than it's been. But I think it's part and parcel of the slowdown in sales and the stabilization of prices."

But Shapiro noted that while the market has slowed, 2005 was a record year, Shapiro said.

"We're still very near the top rather than any other part of the cycle," he said.

Shapiro said home prices are expected to continue growing, but at a slower pace.

"We expect somewhat of an increase this year, but not nearly as high as we've had in the last year or two."

Herb Conley, co-managing director of Coldwell Banker Pacific Properties, said the housing market is moving into a stage in the expansion cycle where historically sales begin to soften but prices continue to grow.

"Understand that even if unit counts drop roughly 10 percent for the year, which is what they dropped in January over last January (2005), that would still make the sales counts for '06 literally the third best year in reported history," Conley said. "So it will still be a very strong year for residential real estate on O'ahu."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com and Andrew Gomes at agomes@honoluluadvertiser.com.