Arkansas Home Sales, Values Rise During 2012

Editor’s note: This is the December 2012 report of The City Wire’s Arkansas Home Sales Report. The report, released monthly, accounts for between 70% and 75% of total Arkansas home sales.

Although the combined number of home sales in Arkansas’ largest markets were up just 2.07% during 2012, economist Michael Pakko said the industry is “moving in the right direction.” Combined sales values were up almost 11% for the year.

Pakko, the University of Arkansas Institute for Economic Advancement chief economist and state economic forecaster, said there are a lot of positives for the real estate sector during 2012, such as low interest rates, stability in home prices and pent up demand in the market.

One source of pent up demand, Pakko explained, is with first time home buyers. He said there is evidence that young adults now living with their parents instead of buying homes could soon seek other arrangements.

THE 2012 PICTURE
Home sales in the four markets during 2012 totaled 18,221, up over the 17,851 during 2011 and up almost 3% compared to 2010. The Northwest Arkansas market topped 6,000 home sales in a year for the first time since 2007.

The combined home sales value in the markets during 2012 reached $2.975 billion, up 10.87% compared to 2011 and up 9.99% compared to 2010.

The City Wire’s Arkansas Home Sales Report captures home sales data in the state’s 14 most populated counties within the state’s four largest metro areas — Central Arkansas, Fort Smith area, Jonesboro/Northeast Arkansas and Northwest Arkansas. The report, which records closed sales, accounts for between 70% and 75% of total Arkansas home sales.

However, December figures were down compared to the 2011 period, and ended two consecutive months of gains. There were 1,255 homes sold during December in the four large market areas, down 4.85% compared to December 2011, and down 8.79% compared to December 2010.

Pakko said December's winter weather may influence January's sales because some closings were likely delayed because of snow, ice and power outages in central Arkansas.

The total value of December homes sold in the four markets was $213.373 million, up 1.64% compared to December 2011, and up 4.77% compared to December 2010. The average sales price of a home sold in the four markets during December was $170,019, ahead of the $159,153 during December 2011, and up almost 15% compared to December 2010.

2012 REGIONAL PICTURE
Regionally, the number of homes sold during 2012 are up in central Arkansas and Northwest Arkansas, and down in the Fort Smith and Jonesboro metro areas.

The average days on market for a home in the four combined markets during 2012 was 95.75, an improvement over the 103.53 during the same period of 2011, but longer than the 93.49 during the 2010 period.

Central Arkansas – Home Sales
2012: 8,791
2011: 8,553
2010: 8,874

Fort Smith area — Home sales
2012: 1,622
2011: 1,690
2010: 1,700

Jonesboro area — Home sales
2012: 1,745
2011: 1,755
2010: 1,763

Northwest Arkansas — Home sales
2012: 6,063
2011: 5,853
2010: 5,373

The top five counties in terms of total 2012 home sales:
Pulaski — 4,151, up compared to 3,940 in 2011
Benton — 3,809, up compared to 3,594 in 2011
Washington — 2,254, down compared to 2,259 in 2011
Saline — 1,384, up compared to 1,366 in 2011
Craighead — 1,355, down compared to 1,435 in 2011

UNEMPLOYMENT IMPACT
Pakko said 2012 was a difficult year to forecast in that he expected strong growth in 2012, revised his estimates downward in the middle of the year and was surprised by stronger than anticipated sales in the latter half of the year. He said the elements for a stronger recovery seemed to be in place – low interest rates and an accelerating economic expansion.

“The numbers are up for the year,” he said. “That's the bottom line. … Actually, the percentage change is a little bit higher than I was expecting. It's moving in the right direction.”

One problem that's dogged the real estate sector, he said, is that unemployment has remained high. In December, the statewide unemployment rate was 7.1% – down from 7.8% in the same month in 2011.

Despite the falling jobless rate, the number of employed in Arkansas was 1.258 million during December, down from the 1.271 million in December 2011. The jobless picture has made some consumers apprehensive, Pakko said, and the lack of consumer confidence has weighed on a housing market recovery.

Although Pakko doesn't anticipate employment improving greatly in 2013, he predicts 2013 homes sales will improve by 6%. He said the state is in the fourth year of a recovery, but it doesn't feel like one because the economy has improved gradually.

“We haven't seen the 'v-shaped' recovery everyone hoped for,” he said.

REALTOR REACTION
George Faucette, CEO of the Coldwell Banker franchise in Northwest Arkansas, said it was his firm’s “best showing in a long time.” Linda Marquess, agent with Crye-Leike Real Estate in Northwest Arkansas, did better than that, saying 2012 was the most successful year she has had in a 41-year career.

“It’s been an incredible year and we expect a repeat performance in 2013, based on the feedback and preorders we are getting for new homes,” she said.

Faucette said market activity did slow some as the year wound down, but there continues to be several good trends in play.

“The lot overhang is being sold off, construction pace has been steady, those new homes are selling and the inventory of existing homes and distressed properties has come way down. This has helped to push average prices up nearly 20% in 2012,” Faucette said.

Celese O'Neal, a Realtor with Keller Williams in Little Rock, said she noticed more competition among home buyers in Pulaski County. Multiple offers on a home aren't as rare as they used to be and that, she said, is a good sign that markets are improving.

Pulaski County's numbers were much improved in 2012 – sales were up 5.36% for the year and prices were up 6.83% at $188,131 – the highest average sales price in the report for the year. O'Neal said there's some evidence that the number of foreclosure sales have dropped and that has led to improved prices and more conventional sales.

Elizabeth King, agent and co-owner of Weichert King Realty in Fort Smith, said the year was an interesting one, as sales were somewhat cyclical and hard to predict. Sebastian County agents sold 1,119 homes in 2012. These sales totaled $153.621 million, relatively flat against $154.253 million in total sales from 2011. The difference in total volume amounted to 0.4% between the two years.

King said 2012 wasn’t the best year she can remember, but it was not near the worst either. She said there was a mix of first-time buyers, investors and homeowners looking to move up in 2012 in spite of high employment rates and an unpredictable economy.