A warmer than usual fall had home builders slinging hammers left and right with 214 new home starts in September in the region’s four largest cities. But commercial construction was off the pace.
Fayetteville, Springdale, Bentonville and Rogers issued combined new residential permits valued at $47.15 million last month. Builders began 69 more homes in September than a year ago and permit values rose 35.6% from $34.748 million reported a year ago.
Fayetteville was the only city to see fewer permits in September. Rogers more than made up for that shortfall with triple-digit gains, while Bentonville and Springdale also reported healthy results. Following are the September residential permit values for the four cities.
• Bentonville: $18.107 million, up 39.6%
• Fayetteville: $6.118 million, down 26%
• Rogers: $13.562 million, up 111%
• Springdale: $9.361 million, up 32.14%
The commercial market in September was down from a year ago. The combined cities issued commercial construction permits valued at $20.763 million in September, down 68% from a year ago when the cities reported new projects worth $66.288 million.
• Bentonville: $4.163 million, down 54%
• Fayetteville: $4.682 million, down 79%
• Rogers: $10.510 million, down 68%
• Springdale: $1.408 million, flat
The pause in commercial work took the total September permit values down to $67.913 million among the four cities, 32.7% below the $101.03 million in September 2015.
QUARTERLY, YEAR-TO-DATE COMPARISONS
Third quarter permits (July 1 to Sept. 30) totaled $211.791 million, down from $345.3 million in the year-ago period. Bentonville was the only one of the four cities to see more third quarter building activity this year compared to last. Following are the quarterly (July through September) permit values for the four cities.
• Bentonville: $86.568 million, up 12.66%
• Fayetteville: $36.888 million, down 73.79%
• Rogers: $45.683 million, down 38.9%
• Springdale: $42.651 million, down 19.3%
Through the first nine months of 2016 the cities issued combined new residential and commercial permits worth $816.2 million, up 35% from the same period in 2015. Growth has been evident in both sectors throughout this year with permit values rising more than $213 million from 2015.
Through September commercial activity which includes multifamily projects has comprised 58.4% of the combined permit values. The four cities issued new commercial permits worth $477.276 million in the first nine months of this year. Some of the largest projects include:
• $107 million Arkansas Children’s Hospital in Springdale;
• $76 million several multifamily projects; and
• $23 million: 8W business complex in Bentonville
While commercial construction has been active, it’s the residential sector that continues to be hot month after month. Builders began 1,443 new homes during the first nine months of this year, 16.5% more than in the same period of 2015. Rising home prices pushed new home permit values up to $338.993 million, a gain of 22.8% from a year ago among the four cities.
Bentonville’s 427 new homes were valued at $124.173 million, up 18.21% from a year ago. Bentonville also has the highest average new home value at $290,800, rising 12.95% from a year ago. Rogers issued 431 new home permits for builders this year with a combined value of $75.092 million, just above the 412 new homes worth $71.129 million a year ago. The average new home permit value in Rogers dropped slightly to $171,907 this year.
Home builders in Springdale started 270 new homes through September valued at $66.244 million. Residential construction is growing by double-digits from a year ago. The number of permits rose 10% from a year ago and permit values are up 15% from $57.549 million last year. The average home permit value in Springdale rose to $245,348 this year, compared to $233,856 in 2015.
Fayetteville builders received 315 new home permits through September, up from 296 a year ago. The value of the 2016 permits totaled $74.484 million, up 13.16% over the $65.819 million a year ago. The average new home permit was valued at $236,457 through September, up slightly from $222,361 a year ago.
COST CONTROL PUSH
Andy Wilson, president of Rausch Coleman Homes of Fayetteville, said 2016 has been busy for the company with overall new home sales up around 10% from last year. Wilson said the company is back to doing most its own lot development in Northwest Arkansas. He said the company is also building in Jonesboro and Little Rock. Outside of Arkansas, Rausch Coleman has projects in Oklahoma City, Tulsa, and San Antonio, Texas.
Wilson said the company has planned more development in Bentonville, Fayetteville, Rogers and Springdale next year because of the ongoing growth in the region. When asked about future growth plans, Wilson said in 2017 the company will likely see double-digit growth in overall unit sales. He said land prices are rising but the company is committed to keeping home prices at 2016 levels.
“We are trying to hold our prices by developing our own lots and looking at other efficiencies that can be applied throughout the company in order to keep costs low for homebuyers,” Wilson said. “It’s kind of like my days at Wal-Mart all over again, looking for cost savings.”
As a former 25-year Wal-Mart executive he oversaw operations and management for hundreds of stores during his tenure as vice president of store operations. Wilson retired from Wal-Mart in 2001.
PERMIT VALUES (January through September)
2016: $239.043 million
2015: $190.484 million
2016: $242.646 million
2015: $233.982 million
2016: $156.466 million
2015: $120.537 million
2016: $178.02 million
2015: $58.51 million