FAYETTEVILLE, Ark. – Arvest Bank today released the residential real estate market Skyline Report results for the first half of 2017 in Northwest Arkansas. The report highlights a significant shift in the mix between existing and newly constructed homes being absorbed.
In the first half of 2016 the number of newly constructed homes being sold was 759, representing 17.4% of total home sales. In the first half of this year there were 1,022 newly constructed homes sold representing 23.3% of total sales. Overall the total number of homes sold, newly constructed and existing homes, remained almost the same – 4,373 in 2016 compared to 4,385 in 2017.
The supply of both existing homes for sale and available lots for future construction ended the period down with homes listed for sale in the MLS database at 2,353, compared to 2,555 at the end of the first half of 2016, and the supply of lots for future construction at its lowest level since the inception of the Skyline Report in 2015 of 29.5 months. At the end of the first half of 2016 there was a 46.1-month supply.
“The supply of existing homes and lots for future development is tightening,” said Mervin Jebaraj, lead researcher for the Skyline Report at the Center for Business and Economic Research at the Sam M. Walton College of Business, University of Arkansas at Fayetteville. “Even more significant is that the supply of lots in desirable areas close to amenities is becoming an issue that will have to be addressed in the near-term. What we are seeing right now is that the majority of available lots are outside of the city centers, and while many homebuyers are willing to live outside of these areas, many others would prefer to be closer to those amenities.”
There were 1,708 building permits issued in Benton and Washington counties in the first six months of 2017, a 10.8% increase compared to the first half of 2016. Most notably, the number of permits issued in Washington County increased 46.0%, from 506 in 2016 to 739 in 2017, while the number in Benton County decreased 6.5% from 1,036 in 2016 to 969 in 2017. According to Jebaraj, this is most likely the result of more affordable homes in Washington County, where the average price of homes sold was $209,899 compared to $227,036 in Benton County.
“While the average price of homes sold in Washington County was lower than in Benton County, the average price per square foot is virtually the same. It seems that the affordability of homes in Washington County is one of the key drivers of this increase in building permits in the county.”
Chris Thornton, executive vice president and loan manager for Arvest Bank in Springdale, said, “The housing market in Northwest Arkansas can certainly be described as robust as we continue to experience solid growth throughout the region. Our mortgage division reached $1 billion in mortgage loans just a little over halfway through the year, indicating that many consumers are in the market to purchase. And with the supply of both available lots and existing homes for sale tightening, we expect to continue seeing a brisk pace in home sales through the end of this year as many consumers are expecting interest rates to rise in the near future.”
In another sign of supply tightening, the number of complete but unoccupied new homes for sale at the end of the first half of 2017 fell to 227, down from 307 at the same time in 2016, indicating that new homes are being purchased at a relatively brisk pace.
The Arvest Skyline Report is a biannual analysis of the latest commercial, single-family residential and multi-family residential property markets in Benton and Washington counties. The report is sponsored by Arvest Bank and conducted by the Center for Business and Economic Research (CBER) in the Sam. M. Walton College of Business at the University of Arkansas.
In 2004, Arvest Bank entered into a contract 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.
The 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.