Purchases of new homes on O'ahu during the first quarter fell by more than half, a dramatic decrease largely created by developers who had fewer units to sell.

New-home purchase contracts from January to March declined 57 percent to 282, compared with 652 in the same period last year, according to a report by market researcher Ricky Cassiday for Central Pacific HomeLoans.

Cassiday said the slowdown is mostly supply driven, meaning there are plenty of prospective buyers for fewer homes.

"Developers cannot produce homes as fast as they did last year, so they are not releasing as many units to the public for sale," he said.

Developers typically hesitate to sell more homes than they can build and deliver in a year. Selling homes in smaller increments also has allowed builders to raise prices in step with appreciating values in the resale market.

However, Cassiday also said there has been softer demand for homes priced beyond the reach of the middle class, which has slowed sales at the high end of the market.

The average list price for new single-family homes and condominiums in the first quarter was $552,619, up nearly $90,000 from $463,137 a year earlier.

New single-family home projects with the most sales during the quarter were Island Classics in Mililani with 47, Waikolo'i in Makakilo with 40 and Montecito at Ewa by Gentry with 29.

Overall, there were 243 new single-family home sales during the quarter, compared with 409 a year earlier. Available inventory at the end of the quarter was around 200 homes, about the same as a year earlier.

New condo projects with the most sales were Kai Nani in Makakilo, with 28, and Spinnaker Place at Ocean Pointe, with seven. Inventory stood at about 40 units, compared with 187 a year earlier.

A year earlier, big-selling projects included 98 sales at The Colony, a Hawai'i Kai mid-rise condo that is sold out, and 78 sales at Ko Olina Kai. There also were about 100 sales at Ocean Pointe and 40 at Island Classics.

Cassiday said several high-rise condo construction projects under way, including Capitol Place in downtown Honolulu and Keola La'i and Moana Vista in Kaka'ako, should improve full-year sales.

"These are big chunks (of inventory)," he said. "I think this is going to be a good year."

At Moana Vista, a planned 492-unit tower, developer KC Rainbow Development began taking reservations last weekend for about 100 units roughly priced from $425,000 to $850,000. Prospective buyers reserved every unit.

"There are still a lot of buyers," said KC Rainbow operations director Allen Leong, who noted that there was greater interest in lower-priced units. "There are a lot of buyers that are price-conscious."

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 quarter totaled 824, which was more than double the 381 a year earlier. The jump was largely from luxury Kaka'ako high-rises Hokua and Ko'olani that were completed in the recent quarter. The average closing price was $790,716, up from $347,991 a year earlier.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.