NWA construction pace trends upward

Local homebuilders and commercial contractors say business is steady through the first one-third of 2012.

April permit values increased 8.87% among the five largest retail districts in Benton and Washington counties when compared to a year ago.

Though individual city results were mixed, Fayetteville, Springdale, Siloam Springs, Rogers and Bentonville together issued new building permits valued at $60.863 million last month, up from $55.717 million in April 2011.

The faster pace was led by robust residential activity and a smattering of large commercial projects such as the $21.7 million new junior high school in Bentonville and a new $5.2 million office building for Outdoor Cap Co., also in Bentonville.

Fayetteville and Bentonville reported stellar increases in the number of new home starts with permit values increasing 179% and 137%, respectively, from the year-ago period.

The five cities issued 126 permits for new homes in April, up 110% from a year ago. Roughly 44% of those were in Fayettevillle and 30% were for homes in Bentonville. Springdale and Rogers each showed slight increases. Siloam Springs did not issue a new home permit last month

Veteran homebuilder, Fred Rausch of Rausch Coleman Homes, is pleased with the progress he has witnessed in whittling down the oversupply of lots that has plagued the region since 2007. He said while there are still ample lots on the books, the choice parcels have been cleanly picked over in recent years as new development virtually ground to a halt.

“We continue to see a few banks working with contractors to put homes on foreclosed lots in those subdivisions in the best locations. Much of what is left for purchase by homebuilders are sloped lots that are more expensive to build out,” Rausch said.

That is why his firm recently purchased a parcel for residential development in east central Fayetteville. Rausch said the development has been approved by the city, but lots won’t be ready for building until 2013.  

In the meantime, his firm has started building in Fayetteville’s Coves at Walnut Crossing — one it’s own developments — and continues to add homes in Rogers and Bentonville.

He said new homes are selling well thanks a warm winter. After a great first quarter, Rausch said, April sales were down a bit, but have rebounded nicely in May.

Mike Chamblee, chief building official for Springdale, said 2012 is off to a promising start, not only in the increase in residential permits and the variety of contractors, but in the definite uptick in commercial building activity across the city.

Northwest Arkansas is trending in step with the nation this year.

“April’s increase in housing production is an encouraging sign that we are returning to a gradual, upward trend that should continue in the year ahead as builders respond to improving demand for new homes in certain markets,” said Barry Rutenberg, chairman of the National Association of Home Builders.

David Crowe, chief economist with NAHB said, “While still less than half the pace of what we would expect in a fully healthy market, the rate of housing production in April was very solid for this point of the recovery and in keeping with the findings of our latest builder surveys that have registered modest improvements in buyer traffic and near-term sales expectations for single-family homes.”

Builder confidence for newly built, single-family homes is measured by an industry index that in May posted its strongest reading since May of 2007.

Crowe said buyers are exuding more confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.