Arvest Bank recently released Skyline Reports on residential and multifamily real estate in Northwest Arkansas for the second half of 2019.
In this edition of the report, there were two measurements that reached either their highest number or lowest number since the Skyline Report began in 2004. There was a total of 4,910 homes sold from July through December, which is the highest half-year number of sales recorded. Adding in the 4,747 homes sold in the first half means 9,657 homes were sold in 2019, the highest annual total.
Conversely, the supply of available lots for building new homes in active neighborhoods in the region fell to 23.3 months, a decrease of 60.9% in the last five years and the lowest supply recorded since Skyline began. The months supply factors in the current pace of absorption of newly constructed homes.
The average price of homes listed for sale in the Multiple Listing Service (MLS) across both Washington and Benton counties has risen by more than $100,000 in the last five years, from $273,676 in the second half of 2014 to $379,342 in the same period of 2019. This represents a 38.6% increase.
Mervin Jebaraj, director of the Center for Business and Economic Research (CBER) at the Sam M. Walton College of Business at the University of Arkansas, indicated that this report is, in essence, a continuation of the past several residential Skyline Reports.
“The residential market in the region continues to demonstrate strength in its ability to absorb a large amount of newly constructed homes,” he said. “At the same time, the number of existing homes listed for sale has declined steadily over the past five years. The bottom line is that there continues to be a strong demand for homes throughout Northwest Arkansas.
“On the supply side, building permits are up more than 20% year-over-year and more than 77% over the past five years. So, in the short-term builders and developers seem poised to meet the strong demand. It will be interesting to see how many new developments will become active in order to meet future demand as the current supply of lots for future building has fallen to its lowest level since the Skyline Report began.”
In the multifamily market, vacancy rates across the region rose from 3.5% to 4.9% due to several large developments entering the market, particularly in Bentonville, where the rate rose to 8.5%, and Fayetteville, where it rose to 5.6%. The multifamily vacancy rates in Rogers, Springdale and Siloam Springs were all below 2.5%. Jebaraj indicated that CBER economists were not concerned with the higher vacancy rates in Bentonville or Fayetteville as it is likely due to the timing of when new developments came online.
Chris Thornton, executive vice president and loan manager with Arvest Bank of Springdale, said about the Skyline report, “This report indicating a record number of homes sold in 2019 isn’t surprising to our mortgage lending team across the region. As the largest home lender in the area, we also had a record-breaking year in the number of mortgages originated. Looking ahead, we will be working and consulting with our real estate development partners to ensure they can continue to meet the current and future demand for homes while maintaining a healthy balance in the market.”
The Arvest Skyline Report is a biannual analysis of the latest commercial, single-family residential and multifamily residential property markets in Benton and Washington counties. The report is sponsored by Arvest Bank and conducted by CBER.
In 2004, Arvest Bank contracted with CBER to collect information about the local real estate markets. CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.
CBER provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.