Pricey high-rise condominiums under construction in Honolulu are selling well this year, but the broader market for new-home sales on O'ahu is struggling, a report shows.

Prospective buyers of new homes on the island signed 838 purchase contracts in the first half of the year, a 26 percent drop from 1,137 contracts in the year-ago period, according to a report by market researcher Ricky Cassiday for Central Pacific HomeLoans.

Cassiday attributed the slowdown to a mix of low supply and high prices. He said developers aren't building enough entry-level homes, while high prices are discouraging buyers facing rising interest rates.

"Now that the market is turned, there isn't much in the pipeline for the cheap townhome," he said.

The average price for new homes this year through June was $541,652, up from $514,078 in the year-ago period. For single-family homes, the average price was $409,139. For condos, the price was $672,280.

Fewer sales and higher prices mirror what's happening in the market for existing housing on O'ahu, though the resale market isn't suffering from low inventory. In fact, inventory of previously owned homes is roughly double what it was a year earlier.

Cassiday said he expects developers — some of whom shifted toward building bigger, more expensive homes during the recent housing market boom — will begin to turn out more entry-level townhomes instead of higher-priced single-family homes.

"Now's the time for them to come back," he said.

High-rise condo development helped sustain condo sales in the first half of the year with 422 contracts, which was 4 percent higher than 406 sales in the year-ago period. New single-family home sales fell by 43 percent to 416 from 731 in the comparable period.

The best-selling project was Keola La'i, a 352-unit high-rise condo under construction on South Street in Kaka'ako by Alexander & Baldwin Inc. There were 210 signed contracts for 290 available Keola La'i units (62 units are reserved for sale under a state affordable housing program). The average price was $598,000.

Watermark Waikiki, a rising tower by Intracorp Cos., was the next best-selling project, with 128 sales for $999,000 on average.

The single-family home project Island Classics by Castle & Cooke in Mililani had 48 sales for an average of $639,000. There were 45 sales at Castle & Cooke's Waikolo'i project in Makakilo for an average of $565,000.

Townhome project Kai Nani by D.R. Horton's Schuler Division in Makakilo had 41 sales for an average of $380,000. There were 41 single-family homes sold at Ocean Pointe by Haseko Homes in 'Ewa for an average of $446,000.

Sales are defined in Cassiday's report as binding sale contracts. Converting contracts to completed sales, also known as closings, can take a year or two while homes are built.

New-home closings during the first half of the year totaled 1,390, which was up 84 percent from 754 a year earlier. The jump was largely from about 600 units in the luxury Kaka'ako high-rises Hokua and Ko'olani, completed this year. The average closing price was $645,950, up from $399,748 a year earlier.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.