NWA home prices increase, unit sales tracking below the 2013 pace

Agents and brokers across Northwest Arkansas report steady work, though the number of homes (742) sold in August in the two-county area was down 9% from the same period last year.

MountData.com reports total August sales of $145.194 million, roughly $11 million shy of the same month last year. Some $2.28 million of that shortfall came in Benton County, while Washington County’s sales were off by $8.88 million compared to August 2013.

The local Coldwell Banker franchise reports that August 2014 was its second best month this year with more than $50 million in closed sales. CEO George Faucette said his firm’s year-to-date unit sales are slightly behind last year, but the average sales price is up 4% year-over-year. He doesn’t see any major hurdles for buyers, noting they do need good credit and the necessary income to qualify. 

Bob Downum, broker with Weichert Downum Group in Springdale, told The City Wire that the numbers are strong on the surface.

“They’re steady, no big surges up or down and while overall sales are lagging last year, 2014 is a lot better than 2012,” Downum said. “It looks to be a sustainable pace.”

Unit sales are up 17% from August 2012 and total sales volume rose 20% from $120.5 million posted in August 2012, according to MountData.com

Downum said there is adequate buyer demand because when new listings priced right come on the market they sell fast. The average days on the market for all homes selling this year is 52.

“We can always use more listings,” he said.

MountData.com also notes there was an average of 5.8 months of inventory at the end of August for homes priced between $100,000 and $150,000. Paul Bynum, market analyst with MountData. deems that a seller’s market. Bynum reports there were 1,049 new listings and 605 pending sales at the end of August. That compared to 1,024 new listings and 647 pending sales in the year-ago period. He said pending transactions are a leading indicator of future market sales.

Total residential listings in the local metro area stood at 3,760 at the end of August, that was 90 more than reported in July and down about 1% from a year ago. New homes accounted for 483 of the listings in August, compared to 340 new home listings in August 2013.

YEAR-TO-DATE
Through the first eight months of 2014, agents have sold 4,867 homes valued in excess of $917.89 million, according to MountData. Unit sales are down 3%, while total sales volume is 0.5% lower than the prior year.

The average per-square-foot price so far this year has been $89, up $1 from last month, Bynum said. The median sales price rose to $155,000 in Benton County, up 0.64% from a year ago and 7.8% higher than in 2012. In Washington County, the media sales price was $150,000 through August of this year, up 0.67% from a year ago and soaring 9% higher than in 2012.

Downum said sellers hear and read that prices are rising but one segment that remains stifled are homeowners who purchased between 2003 and 2008 because they likely paid top of the market prices.

“They realize prices are going up but the increases are mostly tied to fewer foreclosures and more new homes at higher prices in the mix. The hardest category is for used homes, not foreclosures, but those where the buyer saw their neighborhood values go down after they purchased. Prices may have bounced back about 6% in the past two years but there is no real profit at this point that allows a seller to move up or downsize,” Downum said.

He explained that this dynamic not only keeps a lid on inventory but also limits the number of buyers because they can’t afford to sell and move at today’s prices.

MORTGAGE OPTIONS
Wells Fargo Mortgage released a report Monday (Sept. 15) that showed many potential homeowners fear it’s harder to get a home loan so they don’t bother looking. No one would argue that mortgage qualification has tightened since 2007, but banking experts say they are still making loans to people with low to no down payments, less than perfect credit and offering help with closings costs.

Wells Fargo reports that two-thirds of Americans it recently surveyed feel that now is a good time to buy a home, but many are reluctant to do so because of the uncertainty about qualifying for a mortgage.

“Although the homebuying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home,” said Franklin Codel, head of Wells Fargo Home Mortgage Production.

Codel said his bank has taken steps to expand the pool of eligible home buyers. Earlier this year it lowered the minimum credit scores, or FICO scores, for loans that are backed by the government the Federal Housing Administration, Fannie Mae, or Freddie Mac.

“When we expanded FICO ranges, we saw not only an increase in applications but we also saw an increase in approval rates,” Codel said, without providing specifics on application volume or approval rates.

Wells is not the only lender in this region tweaking its mortgage product line to help buyers qualify since the Dodd-Frank banking regulation forced tighter underwriting requirements.

“We have a program we call the ‘Affordable 100’ we have had it for nearly two years and it’s growing in popularity in Benton and Washington counties, especially since the changes in the RD loans came into effect,” said Keith Smith, senior vice president, regional lending manager at Regions Bank in Little Rock.

Smith told The City Wire that the “Affordable 100” has a maximum income level of $47,600 and it provides 100% financing with no added mortgage insurance for borrowers with a 680 credit score.

He said the same program is also available to borrowers with 620 credit score if they can make a 3% down payment. An FHA loan allows for a 580 credit score for first time buyers who can make a 3.5% downpayment. There is also an added mortgage insurance premium on the FHA loan. 

Smith also said Regions has a new product for first time borrowers with no traditional credit history that allows them get down payment assistance for the 5% required equity and closing costs are paid by Regions and not rolled into the loan amount.

He said the new First Time Buyer product is not an FHA loan which is capped at  $271,050. In some markets that is not high enough. Smith said this loan is an option for buyers who may borrow some of the 5% downpayment from family, need to establish traditional credit and get their closing costs paid.