February home building pace stalls across Northwest Arkansas

Overall February building permit values were up almost 30% in Northwest Arkansas, but permits for new home construction fell more than 3% thanks in part to limited availability of residential lots.

Permit values in the region’s four largest cities during February totaled $42.583 million, up 29.3% compared to the $32.913 million a year ago. Residential building comprised the bulk of 2015 total at $31.4 million, which was down compared to the the $32.41 million issued a year ago.

The cities of Fayetteville, Springdale, Rogers and Bentonville issued 139 permits for new homes, compared to 129 permits in the year-ago period. Rogers posted the biggest year-over-year gain in residential starts with permit values rising 16% from the same month in 2014. The other three cities saw permits values nearly flat or declining from a year ago.

Residential Building Permits
Bentonville: $12.459 million, down 2.67%
Fayetteville: $8.167 million, up 1.15%
Rogers: $5.981 million, up 16%
Springdale: $3.793 million, down 40%

Northwest Arkansas real estate agents told The City Wire this month that new homes are selling well, and they expect residential permits through the summer to hold steady with last year which was deemed flat against 2013.  

Kathy Deck, director for the Center of Business and Economic Research, recently said homebuilders hit a comfortable stride in 2014, with ample work but no major inventory built up thanks to steady home sales. She said this is a healthy market as long as supply and demand remain in sync. 

Through February, MountData.com reports there were 387 new homes listed for sale in Benton and Washington counties. In the months of January and February MountData shows there were 166 new homes sold for an average price of $108 per square foot. There appears to be between 3 and 6 months of new home inventory listed for sale with the lower price points having the fewest available, notes MountData.com.

The one thing that holds back more residential building is the limited supply of lots in certain areas like east Fayetteville and across Bentonville, according to Gary Head, president of Signature Bank. He said banks’ holding lots in their inventories have been able to sell most, if not all of their holdings in the past two years.

Arkansas is one of 31 states that added construction jobs since December 2014. Construction employment in Arkansas is up 4.9% or 2,300 since the start of this year, which was the largest increase of any other state, according to the Associated General Contractors of America, a trade group for builders.

"There are lots of good-paying, full-time jobs available in construction, with more work on the way." said Ken Simonson, the association's chief economist.

Construction employment nationwide totaled 6.353 million in February, the highest mark since February 2009, with a 12-month gain of 321,000 jobs or 5.3%, Simonson noted. Federal Bureau of Labor Statistics data shows Arkansas with an estimated 49,700 construction jobs in January, up 6.8% compared to 46,500 in January 2014.

Average weekly hours of all employees climbed to 39.6 hours and weekly earnings averaged $1,066 in construction, the highest levels in the nine-year history of both series. Weekly earnings in construction were 24% above the private-sector average.

COMMERCIAL SECTOR
The commercial and public construction sectors have been the most robust over the past year in terms of new growth.

"Contractors in most states appear optimistic about the prospects for construction, especially for apartments and private nonresidential projects," Simonson said.

The four Northwest Arkansas cities had a cumulative $11.41 million in commercial permit values for February, up sharply from the $2.495 million posted a year ago. The commercial permit rise is attributed to major public projects in Springdale and some private construction which together comprised $10.197 million, or 89% of the regional total.

The city permits involve a new city park at Hylton Road in Springdale with a dog park pavilion valued at $359,328. Splash pads on the south and north sides of the park valued at $359,328 each.

Other large projects in Springdale include a $4.54 million office complex on 48th Street as well as the new $496,650 Today’s Bank location at 5178 W. Sunset. Manufacturer Stabil Loc obtained a permit valued at $2.279 million for its plant in the city’s industrial park. 

Rogers was the only other city of the four to issue commercial building projects last month. The Promenade Point Apartments under construction by Sterling Construction Corp. was issued a permit for a new leasing office at 4101 W. Huntington Dr. This permit was valued at $563,315. 

Bayyari Construction was issued two new permits for commercial buildings in Rogers:
• 1301 W. Hudson Road $275,000
• 1402 W. Hudson Road $375,000

Building Permits (January through February)
Bentonville
2015: $30.112 million 
2014: $44.57 million
-32.4%

Fayetteville
2015: $11.468 million 
2014: $19.657 million
-41.65%

Rogers
2015: $16.068 million 
2014: $6.171 million
160%

Springdale
2015: $20.355 million 
2014: $7.38 million 
175.8%