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To anyone living in Honolulu it might seem surprising, but the skyrocketing cost of housing on Oahu has slowed in the first half of this year – to a point where mainland rent increases are far outpacing those of Honolulu.

That’s one finding of a new economic forecast released Friday by the . The counterintuitive shelter statistics underscore the overarching point of the new statewide economic forecast, which is titled “Hawaii’s Growth Down, But Not Out.”

The report’s general conclusion is that Hawaii’s economy isn’t the red-hot juggernaut that it might appear based on staggering visitor numbers and an unemployment rate far lower than the nation as a whole.

“The overall economy is not as strong as some of these statistics we’re seeing on a daily basis would have us think,” said Carl Bonham, a UH professor of economics who serves as UHERO’s executive director.

And the tapering rise in housing costs is one sign of this, Bonham said.

This isn’t to say it’s cheap to live in Hawaii. The for a tiny studio in Honolulu, for instance, starts around $1,000, while two-bedroom units in town are hard to find for less than $2,000.

It’s just that leveling housing costs are at odds with what often happens in a booming economy.

Normally, . That’s because if everyone’s working, employers usually have to compete to find good workers – often by paying higher salaries and wages. And when people have more money, the cost of goods and services typically goes up.

But that’s not happening locally. Hawaii’s unemployment rate is about half the national rate, which was 3.9 percent in April. But Honolulu’s inflation rate for the first half of 2018, as measured by the Consumer Price Index, was 1.6 percent versus the national average of 2.5 percent. A big reason is slowing housing costs, which make up about 40 percent of household expenditures, Bonham said.

Nationally, housing costs are surging. But Hawaii is different: the��, which rose during the past few years at rates topping 4 percent annually, is now rising more slowly, UHERO’s data shows.

The increase for the second quarter of 2018, for instance, was just 1.7 percent, according to UHERO. That was about half the national rate of 3.4 percent.

So why are prices leveling off? One reason is a ��in 2017, Bonham said.

“If you look at it, it makes sense,” Bonham said. “We didn’t forecast it, but we didn’t anticipate the population decline in 2017.”

Hawaii’s population dropped only a tenth of 1 percent in 2017, which might seem small in a state of 1.4 million people. But Hawaii was one of only three states with such an outmigration, and it happened at a time when there were plenty of jobs in Hawaii.

Also keeping a lid on inflation is middling income growth, which Bonham said “is not what you’d like to see.”

Despite the low unemployment rate, per capita income grew at just 0.5 percent in 2017, Bonham said. “That’s pretty lousy.”

Also contributing to the lackluster income growth is a slackening in some industries. The health care sector is driving growth, and the outlook for tourism is strong, UHERO reported. But jobs in the high-paying construction industry have declined, the report said. And Bonham added that relatively lucrative federal government and military jobs have declined.

With the mainland’s economy continuing to thrive and Hawaii’s cost of living and relatively low wages making life a struggle, Bonham said people without family ties might continue to be lured away from the islands.

“The job opportunities elsewhere are really good, and the cost of living differences are substantial,” he said.

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