Arkansas Home Sales Rise, But Prices Trend Lower

The pace of home sales in Arkansas’ four largest metro areas continues an impressive rise toward the end of 2013, but the average home price is trending lower thanks to pressure from gradually rising interest rates.

During the first 10 months of 2013 the number of homes sold in the four markets totaled 17,546, up 13.4% compared to the 2012 period and at a level not seen since the robust housing market of 2007, according to The City Wire’s Arkansas Home Sales Report. The report is sponsored by Fort Smith-based Weather Barr.

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. This report counts the number of sales closed between January and October.

Home sales have improved throughout the back half of 2013. Sales in the four markets were up 12.4% in August, up 13.2% in September and up 13.4% in October.

The value of homes sold in the four markets during the first 10 months of 2013 was $2.932 billion, up 16.06% compared to the same period in 2012 and up 30.29% compared to the same period in 2011.

Average home prices during the first 10 months in the four markets was $167,148, up 2.35% compared to the same period in 2012 and up 12.39% compared to the same period in 2011. The percentage increase in the average price has declined in the back half of 2013. The average was up 3.87% in August, but the pace of growth declined in August and September to 3.08% and 2.35%, respectively.

Homes also are selling faster. The average days on market so far in 2013 is 87.62, better than the 96.89 in 2012 and 97.09 in 2011.

For the first 10 months of 2013, the number of homes sold in central Arkansas are up 10.39%, up 14.4% in the Jonesboro area, up 18.74% in Northwest Arkansas, and up 8.33% in the Fort Smith area.

Benton County continues to hold a narrow lead as the top Arkansas county for home sales during 2013. The county, with a population of around 230,000, had 3,893 home sales between January and October. Pulaski County, with a population of around 390,000, posted 3,804 home sales in the same ten month period.

OCTOBER ACTIVITY
Home sales activity was up in all four markets during October. There were 1,689 homes sold in in the four markets, up 16.24% compared to October 2012, and up 30.32% compared to October 2011.

However, the average price per home in the four markets was $158,322, down 4.53% compared to October 2012. The average price was up 4.2% compared to October 2011.

There were 772 homes sold in central Arkansas, up 10.29% compared to October 2012, and up 23.72% compared to October 2011.

October home sales totaled 567 in Northwest Arkansas, up 12.72% compared to October 2012, and up 34.36% compared to October 2011.

Jonesboro area home sales totaled 201, up 66.12% to October 2012 and up 67.5% compared to October 2011.

In the Fort Smith area, home sales totaled 149, up 15.5% compared to October 2012, and up 14.6% compared to October 2011.

The value of the sales during October were up 8.98% in central Arkansas, up 10.49% in Northwest Arkansas, up 47.33% in the Jonesboro area, and down 5.99% in the Fort Smith region.

THE REGIONAL PICTURE
Central Arkansas — Home sales
Jan.-Oct. 2013: 8,221
Jan.-Oct. 2012: 7,447
Jan.-Oct. 2011: 7,187

Fort Smith area — Home sales
Jan.-Oct. 2013: 1,470
Jan.-Oct. 2012: 1,357
Jan.-Oct. 2011: 1,429

Jonesboro area — Home sales
Jan.-Oct. 2013: 1,684
Jan.-Oct. 2012: 1,472
Jan.-Oct. 2011: 1,498

Northwest Arkansas — Home sales
Jan.-Oct. 2013: 6,171
Jan.-Oct. 2012: 5,197
Jan.-Oct. 2011: 5,021

The top five counties in terms of Jan.-Oct. 2013 home sales:
Benton — 3,893, up compared to 3,245 in 2012
Pulaski — 3,804, up compared to 3,513 in 2012
Washington — 2,278, up compared to 1,952 in 2012
Craighead — 1,345, up compared to 1,136 in 2012
Saline — 1,302, up compared to 1,160 in 2012

THE INTEREST RATE IMPACT
Katherine Deck, an economist and director of the Center for Business and Economic Research at the University of Arkansas, has said that falling interest rates may have influenced falling prices. The same may be true of October sales in which the average home price dropped to $158,322 from $165,841 a year ago – a decrease of 4.53%.

The October report represents closed sales of contracts that were primarily entered into in August and September. The average rate on a 30-year, fixed interest mortgage was 3.34% at the first of 2013. By the first of August, the rate increased to 4.39% and stood at 4.32% at the end of September.

Interest rates impact the buying power of consumers purchasing a home. A one point bump in the average 30-year, fixed interest rate is an extra $100 per month payment on a $120,000 mortgage.

Bill Ladd, a Realtor with Moore & Company Realty in Russellville and the 2014 Arkansas Realtors Association president, said he is encouraged by increasing sales numbers throughout Arkansas. Through October, 17,546 homes were sold by realtors in the areas surveyed – higher than totals through the first 10 months of the previous five years and a bit behind 18,945 sales through October 2007.

Ladd said increasing sales in Arkansas through October has become the norm rather than the exception, and noted that prices have stabilized through the year. The average sales price through October was $167,148, the highest price on record since the Arkansas Realtors started tracking comprehensive, statewide data in 2005.

JOBS, FORECLOSURE EFFECTS
Jerome Flusche, principal broker with Kralicek Realty in Fort Smith, said even though recent Fort Smith area job announcements have been made that will add more than 1,000 jobs to the area job market, the losses during the Great Recession have still impacted home sales.

“Used to, we had a constant turnover from less-priced homes as people moved on,” he said. “Now, property is not moving as good as it should.”

Flusche said in some parts of the country, home prices are returning to pre-recession levels, but he said the Fort Smith metro area is struggling to recover home prices.

The red-hot Northwest Arkansas housing market continues to do well, with foreclosures being the only drag on the numbers – and that’s minimal. While the number of sales continue to improve year-over-year, the price-per-square-foot has tapered a bit as the foreclosure market has been more brisk in the last quarter, according to George Faucette, CEO of the local Coldwell Banker franchise.

“Every month this year has been better than every month last year, but our sales volume for October was flat compared to the same month last year,” Faucette said.