Arvest Bank on Tuesday (Aug. 29) released its Skyline Report for the residential real estate market in Northwest Arkansas for the first six months of 2017.
The bi-annual analysis of commercial, single-family residential and multifamily residential markets in Benton and Washington counties is conducted by the Center for Business and Economic Research (CBER) in the Sam. M. Walton College of Business at the University of Arkansas.
The report highlights a significant shift in the mix between existing and newly constructed homes being sold.
In the first half of 2016 the number of newly constructed homes sold was 759, representing 17.4% of total home sales. In the first half of this year there were 1,022 newly constructed homes sold, representing 23.3% of total sales.
Overall, according to the report, the total number of homes sold, newly constructed and existing homes, remained almost the same — 4,373 in 2016 compared to 4,385 in 2017.
The supply of both existing homes for sale and available lots for future construction ended the period down, with homes listed for sale in the Multiple Listing Service database at 2,353, compared to 2,555 at the end of the first half of 2016.
The supply of lots for future construction is at its lowest level since the inception of the Skyline Report in 2015 of 29.5 months. At the end of the first half of 2016 there was a 46.1-month supply.
“The supply of existing homes and lots for future development is tightening,” said Mervin Jebaraj, lead researcher for the Skyline Report at the CBER. “Even more significant is that the supply of lots in desirable areas close to amenities is becoming an issue that will have to be addressed in the near-term. What we are seeing right now is that the majority of available lots are outside of the city centers, and while many homebuyers are willing to live outside of these areas, many others would prefer to be closer to those amenities.”
BUILDING PERMIT ACTIVITY
There were 1,708 building permits issued in Benton and Washington counties in the first six months of 2017, a 10.8% increase compared to the first half of 2016. The number of permits issued in Washington County increased 46.0%, from 506 in 2016 to 739 in 2017, while the number in Benton County decreased 6.5% from 1,036 in 2016 to 969 in 2017. Jebaraj said the discrepancy is the result of more affordable homes in Washington County, where the average price of homes sold was $209,899, compared to $227,036 in Benton County. He did not that the average price per square foot was about the same.
“The housing market in Northwest Arkansas can certainly be described as robust as we continue to experience solid growth throughout the region,” said Chris Thornton, executive vice president and loan manager for Arvest Bank in Springdale. “Our mortgage division reached $1 billion in mortgage loans just a little over halfway through the year, indicating that many consumers are in the market to purchase. And with the supply of both available lots and existing homes for sale tightening, we expect to continue seeing a brisk pace in home sales through the end of this year as many consumers are expecting interest rates to rise in the near future.”