Hawai'i's housing market slowdown hit O'ahu single-family home builders hard last year, but high-rise developers kept overall sales of new homes from falling dramatically, a new report shows.

New-home sales on O'ahu dipped 2 percent last year to 2,166, marking a second consecutive year of fewer sales, according to data compiled by Ricky Cassiday for Central Pacific HomeLoans.

Last year's drop was minor compared with the 30 percent decline in 2005. But for single-family home builders, the slowdown was dramatic — a 40 percent reduction to 650 sales last year from 1,080 a year earlier.

"The market definitely slowed down," said Bob Brant, president and CEO of Gentry Homes, a local builder of single-family homes in 'Ewa Beach. "Everybody felt that."

According to Cassiday's report, the 430-home sales drop from 2005 to 2006 was split among O'ahu's largest single-family home builders — roughly 200 fewer for Gentry, 100 for Ocean Pointe developer Haseko, 80 for D.R. Horton's Schuler Division and 40 for Castle & Cooke Homes Hawai'i.

Condominium developers nearly made up for the single-family sales drop with an increase of 374 sales.

There were 1,514 condo sales last year, a 33 percent rise over 1,140 sales a year earlier, Cassiday reported. In 2004, there were 1,938 condo sales.

The rise in condo sales was carried by high-rise developers that reported 1,132 sales last year, or 743 more than a year earlier. By contrast, townhome developers reported 382 sales, or 369 fewer than a year earlier.

Among the condo tower projects that contributed sales last year were Capitol Place in Downtown Honolulu, Keola La'i and Moana Vista in Kaka'ako and Watermark Waikiki.

DEMAND SOFTER

Still, demand last year was considerably softer in the general market. The Honolulu Board of Realtors reported sales of previously owned O'ahu homes were down 17 percent last year. And some new-home developers have turned to offering buyers special incentives.

Recent promotions include a 3 percent credit to purchasers of the last 19 units in the 909 Kapi'olani high-rise nearing completion, and $20,000 in "free upgrades" for buyers of select Castle & Cooke homes in Mililani Mauka.

Gentry, too, has offered incentives on a limited basis recently, but Brant said the slowed sales pace also is tied to supply. Gentry exhausted its supply of entry-level homes last year and won't have any more until next year.

"It's a matter of timing — when you introduce (new product) and what you have to sell," Brant said.

For Gentry, entry-level homes in today's market are priced in the $400,000s and comprise detached single-family homes on land owned jointly by homeowners in the subdivision.

The next new addition Gentry plans is Latitudes, a neighborhood of 284 homes with reduced yards and 1,500 to 1,900 square feet of living space (zero-lot-line homes) in the $500,000s. Sales in the 'Ewa Beach development are expected to start in July.

Brant said Gentry's sales in the first three months of this year have been about even with last year, but that he expects the general new-home market for the full year will trail last year and won't rebound for awhile.

"I think it will be flat for the next couple of years," he said.

PERMITS PEAKED

The University of Hawai'i Economic Research Organization recently reported that statewide residential construction permits peaked in 2005 as home prices more than doubled since 2000 and sapped demand for many hopeful buyers priced out of the market.

"With home price appreciation over and affordability at recent lows, real residential construction will continue to recede gradually," the UHERO report said.

UHERO said residential construction permit values peaked in 2005 at $2.26 billion, fell to $1.65 billion last year and is forecast to gradually recede toward $1.3 billion by next year. Typically, O'ahu accounts for roughly one-third of statewide residential construction.

According to Cassiday's report, the average new-home list price last year was $577,639, up from $541,686 a year earlier. The 29 percent rise was partly due to developers building more luxury homes as well as a general rise in property values.

In O'ahu's resale housing market, average prices rose 5 percent for single-family homes and 14 percent for condos last year.

Sales in Cassiday's report are defined as binding sales contracts, which typically are converted from initial nonbinding reservations. Converting contracts to completed sales, also known as closings, can take as long as a year or two while homes are built.

New-home closings last year totaled 2,202, which was down 4 percent from 2,281 a year earlier.

The average closing price, which could reflect sales contracts signed a year or two earlier, was $665,643, or 29 percent higher than $516,407 a year earlier.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.