FAYETTEVILLE, Ark. – Arvest Bank today released the residential real estate market Skyline Report results for the second half of 2016 in Northwest Arkansas. The report noted an almost equal increase in building permits issued, with a 37.0 percent increase over the same period in 2015, and new homes being occupied showing a 37.6 percent increase.
Significant absorption of new homes led to the lowest level of remaining months of unbuilt lot inventory, 35.1 months, since the inception of the Skyline Report in 2004.
“Given the increase in building permits we’ve seen during the past twelve months, it is quite impressive that the absorption of newly constructed homes has kept pace,” said Kathy Deck, 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. “Overall the residential real estate market is as hot as we’ve seen it since the recession. Moving forward we will be paying attention to two issues that could slow down the pace of absorption – the forecasts for slower job growth in the area and the price of lots that are remaining, as this could limit builders’ ability to build the price of homes that are selling.”
There were 1,561 building permits issued in Benton and Washington counties in the first six months of 2016 and 1,574 new homes sold in the last six months of the year indicating good balance between the number of new homes being constructed and the number of new homes being purchased. In the second half of the year there were 1,638 permits issued, a 37.0 percent increase from the 1,196 permits issued during the same period of 2015.
The average sale price of homes sold during the period increased 7.4 percent from the same period in 2015 in Benton County, from $206,575 to $221,944. In Washington County, it increased 6.7 percent, from $189,093 to $201,804.
Centerton, in Benton County, has emerged as a hotbed of building activity. The number of building permits issued in Centerton from July through December was 208 – a 49.9 percent increase year-over-year and the third highest total of all cities in Northwest Arkansas. On the same note, there were 288 houses sold in the city during the period, a 46.9 percent increase over the same period in 2015.
“It is good to see the residential market being so active while also remaining well-balanced in terms of supply. The market was equally hot prior to the recession, but at the end of 2006 there were more than 2,500 complete but unoccupied houses on the market and now there are fewer than 300. We hope that this balance is sustainable moving forward.”
“As Northwest Arkansas has continued to experience strong growth, we at Arvest have had the opportunity to help thousands of customers get into homes,” said Craig Shy, executive vice president and loan manager for Arvest Bank in Fayetteville. “During the next several years, expectations are that interest rates will rise slightly, but we keep reminding customers that even if rates increase slightly, they will still be very, very low from a historical perspective. The best news is that, in a balanced market like this, it is generally good for both buyers and sellers, as is evidenced by the large number of both new and existing homes that sold during the last half of 2016.”
The total number of new and existing homes sold in the last half of 2016 was 4,772 – a 12.1 percent increase from the 4,257 sold in the last half of 2015.
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.