Skyline Report: Building Permits Up, Values Down

The number of building permits issued in the first six months of 2015 is up 15 percent from the previous year, according to a new residential Skyline Report.  

The report is sponsored by Arvest Bank and conducted by the Center for Business and Economic Research in the Sam M. Walton College of Business at the University of Arkansas.

To read the full report, click here.

Benton County comprised 845 of the 1,359 permits issue, while Washington accounted for the remaining 514, according to the report.

The Skyline Report also noted a 30-percent increase in building permits between the first half of 2015 and the last half of 2014.

“We’ve seen both demand for new and existing housing increase in Northwest Arkansas,” Kathy Deck, director of the CBER, said in a press release.

Meanwhile, the average value of all building permits from January through June was $234,753, down a half-percent from the same time period the previous year, and down 5 percent from the last half of 2014.

Johneese Adams, senior vice president and mortgage loan manager for Arvest Bank in Fayetteville, said that although the overall value of building permits was lower, an increase in price per square foot suggests that builders and buyers are focusing on smaller-sized homes that reflect a greater value for the cost.

Home values, as measured by the average cost per square foot of existing homes sold during the first half of 2015, increased by 1.3 percent in Benton County to $89.77 from $88.61 during the second half of 2014. In Washington County, the average cost per square foot of existing homes sold in the first half of 2015 was $93.21, up 4.4 percent from the average cost per square foot of $89.30 reported during the second half of 2014, according to the Skyline Report.

“Slightly smaller homes with the same types of amenities seen in larger homes may drive down the average value of the building permit but it reflects the added value that people are looking for while shopping for a home now,” Adams said, in the press release. “Since our mortgage division has already surpassed $1 billion in new and refinanced loans this year for the 13th year in a row, the evidence shows that home buying is not slowing but is actually growing as mortgage rates remain relatively low and rental property is in short supply.”

In total, 3,769 existing homes were sold in Benton and Washington counties during the first six months of 2015, an increase of 20.7 percent from the 3,122 sold during the same time period of 2014, according to the report.

The sold price of existing houses on the market were mixed in Benton and Washington counties, compared with the second half of 2014.

The average sold price of Benton County homes during the first half of 2015 was $200,326, down 1.5 percent from the average sold price of $203,419 during the second half of 2014. In Washington County, the average price of existing homes sold was $194,654, up 8.9 percent from the average sold price of $178,774 in the second half of 2014.

Lot Supply Lowest Since 2008

Deck said CBER researchers are watching the lot inventory and new plats as they come before area planning agencies, and the region has the lowest level of residential lot supply since 2008.

A total of 27,850 lots were in the 381 active subdivisions identified in the Skyline Report during the first half of 2015. Of those lots, 18,409 were classified as occupied, 8,324 were classified as empty, 185 were classified as starts, 672 were classified as being under construction and 261 were classified as complete but unoccupied, according to the report.

Of the previously unoccupied houses, 1,072 became occupied during the first half of 2015, up 2.3 percent from the 1,048 in the second half of 2014.

Using the absorption rate from the past year, CBER estimates that there is about a 53-month supply of remaining lots in active subdivisions in Northwest Arkansas.

“We are not seeing as many subdivisions being platted as we did in the boom,” Deck said. “Those that are being platted are being developed right away, so they don’t linger on the market as empty lots. I think that continued practice will keep the residential market from overheating, even as activity is quite brisk.”