Arvest Bank recently released Skyline Reports on residential and multifamily real estate in Northwest Arkansas for the second half of 2020, and the data shows a very robust real estate market with record sales that is creating a strong market for builders and sellers.
One year ago, in the last half of 2019, the total number of new and existing homes sold in Benton and Washington counties hit a record high of 4,910. In the second half of 2020, that record high was shattered as 5,726 homes were sold. There were 1,465 newly constructed homes sold.
Researchers at the Center for Economic and Business Research (CBER) at the Sam M. Walton College of Business at the University of Arkansas indicated that much of the strong sales environment can be attributed to historically low interest rates in the second half of the year.
As a result of such strong home sales in the period, inventory of homes for sale decreased 61.0% from the second half of 2019 to a record low of 707, and the number of complete but unoccupied new homes fell to 245. For sellers, the strong demand for homes combined with shrinking inventory levels resulted in a record-low average number of days on the market for a home of less than 90 days.
The average price of homes across both Washington and Benton counties rose at a faster pace than previous years, with Benton County homes increasing by 10.7% to $293,403 while Washington County homes increased by 11.8% to $268,987.
“The residential real estate market in the region is very strong right now, but the balance between supply and demand has certainly tipped in favor of sellers for the time being,” CBER director Mervin Jebaraj said. “Thankfully, it appears that home builders are seeing the need for more supply and are reacting as the number of new building permits issued hit its highest level since the first half of 2006. Buyers are motivated by low mortgage interest rates, but those low rates are being somewhat offset by accelerating home prices.”
In the multifamily market, vacancy rates across the region rose slightly from 4.8% in the second half of 2019 to 5.0% in the second half of 2020. The vacancy rates in Fayetteville, Springdale and Siloam Springs all fell, but were offset by increases in Bentonville and Rogers, where a large number of new units entered the market and were not fully absorbed.
“Our mortgage division certainly has felt the record sales that this report highlights, as they had a record year for home loan volumes,” said Johneese Adams, senior vice president and mortgage manager with Arvest in Fayetteville. “We are also very busy working with our home builder customers as they try to increase supply in the market by ramping up construction to meet the strong demand.”
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 and conducted by CBER. In 2004, Arvest 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.