On September 16 the Federal Reserve raised its benchmark rate by a quarter point, to a range of 3.75% to 4%. It was the Fed's first increase in more than three years, the vote was unanimous, and the Fed's own projections leave room for another hike before the year is out. Thirty-year mortgage rates had already climbed back toward 7% in the weeks before the meeting, so the hike mostly confirmed what lenders were pricing in. If you're buying or selling in Hawaii this fall, the useful question isn't whether to panic. It's how to adjust your plan.
What the Fed actually did on September 16
The Fed doesn't set mortgage rates. It sets the overnight rate banks charge each other, and mortgage rates follow the bond market's read on inflation and where Fed policy is headed. The Fed's statement said inflation "remains elevated," and Redfin's economics team pointed out that most Fed officials now expect at least one more increase this year. Their take is that mortgage rates will bounce around but stay high until the pressures behind inflation, oil prices included, let up.
My honest read: I'm not telling anyone to wait for a rate drop in 2026. Nobody can promise one, and the Fed is signaling the opposite.
Oahu house prices haven't flinched. Condos have.
Here's the part that surprises people. Higher rates have not cooled Oahu's single-family market. Honolulu Board of Realtors figures for August show the median single-family price up 12.2% from a year earlier to $1,240,000, just shy of June's record of $1,242,500. Houses sold in a median of 17 days, sellers got a median of 100% of their original asking price, and about half of all house sales closed at or above asking.
Condos are a different market. The August condo median slipped 1% to $510,000, active condo listings rose about 4% to 2,512, and only around one in ten condo sales closed above asking. Condo buyers have negotiating room that house buyers mostly don't.
One number I'm watching: single-family pending sales fell 7.6% from last August. Pendings are contracts signed now that close in October and November, so that dip plus a fresh rate hike could show up in fall closings. The neighbor islands are already running cooler. Kauai closed fewer home sales through August than it did last year, and Maui is still a buyer's market with prices easing.
Buying this fall: run the numbers again
If your preapproval is from early summer, get it refreshed. On an $800,000 loan, principal and interest at 6% is about $4,800 a month. At 7% it's about $5,320. That's roughly $500 a month for the same house, and it changes what you can comfortably offer.
A few things I'm doing with buyers right now:
- Asking sellers for a credit toward a rate buydown instead of a straight price cut, especially on condos where sellers have less leverage.
- Having clients ask their lender to compare a fixed loan, an adjustable loan, and a temporary buydown side by side at today's rates.
- Checking whether a seller's existing VA or FHA loan is assumable. A 3% or 4% loan from a few years ago is worth real money in this market.
- Talking with the lender about when to lock. Rates can move quickly after Fed meetings and inflation reports.
Selling this fall: price for the buyer who just redid their math
If you own a house on Oahu, you're still in a strong position, but your buyer's monthly payment just went up while your price didn't come down. Price it right from day one. With a 17-day median, a listing that sits for six weeks gets noticed for the wrong reason.
If you're selling a condo, plan on negotiation. A seller-paid buydown credit often does more for a buyer's monthly payment than the same dollars taken off the price, and it keeps your sale price (and your building's comps) intact. Have your AOAO documents, reserve study, and insurance details ready early. Condo buyers are asking more questions, not fewer.
One deadline for Oahu owners
Separate from rates but time-sensitive: if you bought and moved into an Oahu home this year, the deadline to file your home exemption with the City's Real Property Assessment Division is September 30, 2026. That filing applies to the 2027 to 2028 tax year, and missing it means paying more property tax than you need to.
Rates at 7% aren't a reason to freeze. They're a reason to plan more carefully. If you want me to run your numbers at today's rates, or talk through what your home would realistically sell for this fall, give me a call. I'm happy to walk you through it.