Fewer Oahu real estate prices are dropping, and Honolulu has improved its ranking among U.S. cities with price reductions, according to the latest research from real estate search engine Trulia.com.

As of Feb. 1 about 19 percent of Honolulu real estate listings marketed on Trulia.com sometime during the past year had dropped prices at least once. The average price reduction was 8 percent, Trulia.com said today in a report that gleans annual price reductions from among the Web site's live listings.

As a result, Honolulu ranked 41st best out of 50 major cities tracked by Trulia.

“;In your market, sellers and buyers are doing a better job of coming together on pricing,”; said Ken Shuman, a company spokesman. “;You are seeing major changes in your market; in February there are 30 percent fewer reductions than there were in November.”;

That said, sellers living in Hawaii ZIP codes with the most foreclosures showed more listing reductions and greater price drops, he said.

For instance, 35 percent of the listings in Kailua-Kona, which was RealtyTrac's foreclosure capital of the state in 2009, had an annual price reduction averaging 16 percent. Likewise, 34 percent of the listings in Waikoloa had been reduced during the year, with an average drop of 14 percent.

“;Distressed areas have to compete with bank-owned properties, so sellers have more price pressure,”; he said.

Still, Shuman said the percentage of Honolulu listings that had a yearly price drop as of Feb. 1 was lower than the national average. As many as 21 percent of the homes on the market in the United States as of Feb. 1 had at least one price cut, he said.

In general, Trulia reported that price reductions, which were at their lowest level since last April, were leveling off as stability returns to the U.S. housing market.

“;Seeing lower levels of price reductions nationally is an early indicator that we may be getting closer to a healthier real estate market,”; said Pete Flint, Trulia's co-founder and chief executive officer. “;So far this year, we've seen more engagement by homebuyers than we've ever seen before on Trulia, and it shows no sign of slowing down.”;

However, as Honolulu and the rest of the county get closer to the April homebuyer tax credit expiration date, more sellers could begin chopping prices, Shuman said.

“;Right now, sellers still see a pretty long window of activity generated by the tax credits, but as we get closer to the deadlines, they could begin panicking,”; he said. “;We may see further price drops.”;