Leo Bogee had only spent a few weeks looking at O'ahu homes for sale recently when he got an unexpected enticement from a new-home builder — $5,000 toward closing costs on a house in Ma'ili.

The offer, which helped clinch the deal for the retired Navy man, is part of a growing national trend of home builders offering more incentives to entice buyers in a slowing market. The trend is now reaching Hawai'i.

Incentives here are still relatively few and small, especially when compared to some Mainland markets where developers are lavishing buyers not just with upgraded appliances or flooring, but also with price discounts, vacations and cars.

Hawai'i developers aren't confronting ballooning inventories of unsold homes or falling prices like on the Mainland, but a few are offering special deals to keep the sales coming as buyer demand retreats.

Corinda Wong, a Prudential Locations agent and partner who's been in the business 17 years, said she's aware of a few new-home projects offering incentives.

"I haven't seen a lot," she said. "It's just starting."

Recent offers have included better appliances, interior finish upgrades, paid homeowners association fees, below-market interest rates and reduced closing costs.

Some builders also are increasing commissions paid to outside brokers who bring customers to their projects.

At Ko Olina Kai Golf Estates & Villas, recent advertisements offer buyers a year's free membership at Ko Olina Sports Club, no homeowners association fees for two years and new standard interior features including granite countertops and upgraded tile and carpet.

SOME CANCELLATIONS

At Ho'olu Landing, a 47-unit project in Makakilo, the developer last month ran a limited special giving buyers upgraded kitchen and laundry appliances, plus a two-point closing cost discount on loans through Towne Island Mortgage.

Ho'olu developer Aiello Development Group also offered a $2,000 wiring package upgrade to the first buyer during last month's Parade of Homes, and held a drawing during the event for a $500 Home Depot gift card.

Peter Aiello, president of Aiello Development, said the incentives were a response to 10 or 11 cancellations mostly from Mainland buyers. "That hit us hard," he said. "A lot of Mainland (investors) have dropped out."

Prior to the cancellations, the project was selling well, about eight or nine homes a month, Aiello said. Following the Parade of Homes special, eight homes were bought and Ho'olu is no longer using incentives to help sales.

In a couple of special cases, however, Aiello said he agreed to throw in a few extras after buyers negotiated for them. But he expects the remaining few homes to sell out easily before project construction is completed in February.

"We're not lowering our prices," he said. "We've had really brisk sales."

SHIFT IN MARKET

To be sure, many new home projects are not luring buyers with freebies, but to see incentives emerging at a few projects underscores the shift under way in the local real estate market that in the last few years had developers turning away buyers.

The number of new-home sales this year is still up because of several high-rise condominiums that are nearing completion.

But weaker demand is evident in O'ahu's resale market, where sales of previously owned homes fell 17 percent in the first 10 months of the year compared with the same period last year.

Local developer Stanford Carr said some home builders were caught chasing the market too aggressively. He said as home values soared over the last few years, developers built homes at higher price points. But now with prices flattening, it's harder to sell higher-end homes that aren't affordable to the bulk of buyers.

"It's just an adjustment," Carr said of incentives. "It's still a supply constrained market. If you had new products at $500,000 or less, you'd be selling them all day."

Carr said it's mostly resort home projects turning to incentives. At Carr's Kulalani project at the Mauna Lani Resort on the Big Island, the incentive is a credit equal to 5 percent of the purchase price that can be used several ways including upgrades, prepaying maintenance fees or reducing loan costs. For units priced from $780,000 to $1.2 million, that's a credit of $39,000 to $60,000.

But in Maui's primary housing market, Carr's Cottages at Kehalani isn't offering incentives. Last Sunday, 16 units were made available for sale, and 11 were bought in one day, Carr said.

The last time Hawai'i developers offered widespread incentives for home purchases was during the mid- to late-1990s market decline.

Among common incentives back then were low-interest mortgages, free furniture, appliances and cash for down payments.

One of the more creative incentives was for two Maui projects where developer A&B Properties in 1997 promoted a "Home Bridal Registry" in which friends of a buyer could deposit cash gifts into an escrow account that A&B would match with up to $5,000.

In early 2000, Castle & Cooke Homes was selling $140,000 Havens of I'i Vistas townhomes in Mililani with $17,000 worth of incentives, including $5,000 for furniture, one year paid maintenance fees, no points or closing costs and a "huge price reduction."

During the market's downturn, median prices for existing homes fell 21 percent for single-family homes and 42 percent for condominiums, and some new-home developers were forced to lower prices in response.

Home prices this year have not declined from a year earlier, so there's been little pressure for developers to cut prices.

Market analyst Ricky Cassiday said developers regard price reductions as the incentive of last resort.

PRICE CUTS LAST RESORT

"It's blood in the water," he said. "If I wanted to boost my sales I'd be doing mortgage rate buy-downs and maybe things like flat-screen TVs."

Bogee, the recent Ma'ili homebuyer, said his $5,000 closing cost credit was a big factor in his purchasing a roughly $535,000 house at Sea Country, a project by the Schuler Division of D.R. Horton.

"It kept us with the home there," said Bogee, who had been looking at homes in Kunia, Mililani and Makakilo. "We were trying to use as little of our money as possible."

Reach Andrew Gomes at agomes@honoluluadvertiser.com.