NWA home building slows, commercial pace rises

It’s been a good year for home builders across Northwest Arkansas, but the residential construction pace in the region’s four largest cities continues to taper with a 15% reduction in the number of new home starts in October compared to a year ago.

The cities of Fayetteville, Springdale, Rogers and Bentonville issued permits for 122 new homes during October with a value of $29.788 million. This compared to 145 permits worth $34.747 million in the year-ago period.

Springdale was the only city of the four to report a busier October. While the number of permits increased slightly to 18, the value rose some 38%, according to city records.

RESIDENTIAL PERMIT VALUES (October)
Bentonville $11.240 million, down 26%
Fayetteville $8.412 million, down 4.4%
Springdale $5.488 million, up 38%
Rogers $4.649 million, down 26%

Several builders interviewed by The City Wire in recent months said the residential construction pace is steady and sustainable at this time, after making up some ground in shorter suppliers earlier this year. Local home builders expect to close 10% to 15% more transactions this year which would make 2013 the best business climate they have witnessed since the market recovery began in 2009.

MountData.com reports new homes are selling well throughout the region, with 69 pending transactions during October. The data firm reports that agents and builders sold just over 200 new homes during past 90 days, with an ending new home inventory of 366 properties, a 5.4-month’s supply.

PRICES, DEMAND
Across the region, the average selling price for new homes in October was $106 per square foot, according to MountData.com. Prices are up slightly from this last year and are expected to rise more in later 2014.

Among the four cities noted in this report, the largest overhang of new unsold homes listed for sale are located in Bentonville (110) and Rogers (84). Given the ongoing demand in these two markets, Paul Bynum analysts with MountData estimates about a 5.5-month supply.

Fayetteville shows the tightest supply with 44 new home listings last month, and 17 sales left a 2.6-month supply of new homes on the market, according to MountData.com

Springdale has the slowest moving market for new home sales averaging three transactions last month, at the lowest average price of $98 per square foot.

Bentonville had the highest price per square foot at $110, while Rogers and Fayetteville came in at $105 and $106, respectively.

COMMERCIAL UPTICK
Much of the construction activity in the region this year has been residential, but this fall a number of restaurants and other retail outlets have begun to pop up.

In October, nearly half of the total $58.107 million in new permits issued by the four cities were for new commercial projects. Commercial permit values totaled $28.319 million, up 348% from the same month in 2012. The October permits were boosted by one large project, the new Walmart Supercenter in Springdale. The new supercenter under construction at Elm Springs Road and I-540 in Springdale was valued at $15.442 million when the permit was issued by the city last month. It was one of two new permits totaling $18.724 million issued by the city in October.

Rogers issued a couple of large permits totaling $5.187 million in value. The largest – $4.337 million – being a new addition to the Preformed Line Products facility located at 2740 S. First St. The other permit valued at $850,000 is for the new Longhorn Steakhouse under construction at 2206 S. Promenade Blvd.

In Fayetteville there were a handful of new projects valued at $3.88 million, up from $139,000 reported a year ago. Casey’s General Store is under construction at 2720 W. Wedington Drive in Fayetteville. The value of this convenience store and gas station is $2.125 million.

Also in the works is a 15,000 square-foot mixed-use space at 525 W. Willoughby Road under construction by Joe Terminella as well as a retail strip center shell located at 240 E. Joyce Blvd.

Bentonville issued two new commercial permits last month both listed as convenience stores, with no other detail available.

Other projects on tap in the region according to permits issued by the Arkansas Department of Health include:
• Slims Chickens, W. Wedington Drive and Golf Club Drive in Fayetteville;
• Kum & Go, Huntsville Road & Ray Avenue in Fayetteville;
• Freddy’s Frozen Custard & Steak Burgers, 4507 W. Walnut in Rogers;
• LIttle Caesars, 931 W. Walnut in Rogers; 
• Cherry Berry Frozen Yogurt, 1011 Mt. Olive in Siloam Springs; and
• CVS Pharmacy at Dartmoor Road and Bella Vista Way in Bella Vista.

PERMITS TOTALS (October)
Springdale: $24.312 million, up 199%
Fayetteville: $12.299 million, up 45%
Bentonville: $11.76 million, down 22%
Rogers: $9.836 million, up 27%

(Permits are for new construction, additions and remodels are not included.)