The median sale price for existing single-family homes on O'ahu fell in July, a month after prices climbed to a record high and surprised some market watchers.

July's $640,000 median price was 3 percent lower than the median price a year earlier, and returned to what mostly has been a picture of flattening prices after several years of double-digit percentage-point growth.

The gain compared with June, when the median single-family home resale price rose 7.2 percent from a year earlier to $685,000. The relatively modest surge broke the previous record of $668,300 set in May 2006.

For the first seven months of the year, the median single-family home sale price is up just 1.6 percent to $645,000. The median price is a point at which half the homes sell for more and half for less.

The Honolulu Board of Realtors, which released July sales data yesterday, said the price swings over the last two months have had more to do with where homes are selling as opposed to inherent value changes.

The trade association said 55 percent of homes sold last month were in the more affordable Leeward O'ahu region, compared with 44 percent in June.

Sonya and Bob Sabatini, a local couple in the fence contracting business, bought their first home last month. They did so not so much because of flattening prices, but because interest rates have been creeping higher.

"We felt it was good timing," Sonya Sabatini said of the $620,000 home with three bedrooms in Pacific Palisades. "It wasn't too bad for the area. It could be better. It's Hawai'i — you pay for the sunset."

Harvey Shapiro, Honolulu Board of Realtors research economist, noted that typical interest rates for a 30-year fixed-rate mortgage are up half a percentage point since the start of the year to about 6.25 percent.

While some buyers may be pressured into buying a home for fear that interest rates may move higher, Shapiro said higher rates have contributed to slowing sales.

"This rise has had a significant effect in our housing market since our mortgage balances are among the highest in the nation," he said.

The number of single-family home sales this year through July is down 6.5 percent to 2,241. Last month there were 339 sales, down 10.6 percent from a year earlier.

While sales volume was down, homes on the market are selling quicker than they have in the last 18 months, in part because of relatively low inventory.

Single-family homes sold in July spent a median 37 days on the market before selling, the lowest since December 2005, and down from a recent peak of 70 in February.

There were 1,818 single-family homes on the market last month, down from 1,885 a year earlier and a nine-year high of 2,052 in November.

Chason Ishii, president of Coldwell Banker Pacific Properties, said it's unusual for inventory to be declining while sales are dropping. Typically, he said, inventory rises as sales decline.

For the last two months, inventory was lower compared with the same month a year earlier, which halted a trend for higher year-over-year inventory levels that had persisted since late 2005 when sales peaked.

"We're just not getting a lot of new listings on the market," Ishii said.

Ishii figures that buyers holding back to see if prices would fall have created a pause in the market that has discouraged some potential sellers from listing their property.

In the condominium market, there also were fewer sales at a quicker pace in July, but the median price rose slightly to a record.

There were 457 condo sales in July, an 8.2 percent decrease from a year earlier. The median price was up 1.8 percent to $335,000.

Monthly year-over-year median condo prices have consistently risen over the last several years, and July's price was a new record, up by $1,000 over the previous high set in June at $334,000.

Inventory in the last few months has been below year ago levels, and in July stood at 2,315 units, down from 2,634 a year ago and below a nine-year high of 2,750 in September.

Condos spent a median 35 days on the market before selling last month, the lowest since April 2006 and down from a recent high of 59 in February.

There were 3,435 condo sales this year through July, down 14.4 percent from the year-earlier period.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.