Skyline Report: Home prices jump 26%; apartment vacancy ‘functionally zero’

According to new real estate reports, the average home sales price in Northwest Arkansas rose by 26.8% in the first half of 2022 from the same period last year. Over the same period, the multifamily vacancy rate fell to 2.3%, from 3.4%.

Fayetteville-chartered Arvest Bank released Tuesday (Sept. 13) the Skyline Reports on residential and multifamily real estate in Benton, Madison and Washington counties for the first half of 2022. The biannual reports are sponsored by the bank and completed by the Center for Business and Economic Research (CBER) in the Sam M. Walton College of Business at the University of Arkansas.

Click here for a PDF of the multifamily report.

Click here for a PDF of the residential report.

CBER Director Mervin Jebaraj said the 2.3% vacancy rate for apartments is so low as to be “functionally zero.” Multiple apartment complexes in Northwest Arkansas have waiting lists, and the vacancy rates for the most popular units are 0.8% for one-bedroom and 1% for two-bedrooms apartments.

The low inventories are leading lease rates to rise. The average monthly rate for a Northwest Arkansas apartment has increased to $860.87 in the first half of 2022 from $789.06 in the second half of 2021. In the first half of 2022, the rates rose by 12% from the same period last year. Over the past 10 years, the rates are up 61.3%.

According to the report, $371.83 million in multifamily building permits were issued in the first half of 2022, up from $216.9 million in the second half of 2021.

In the first half of 2022, Northwest Arkansas homes sales declined by 19.6% to 4,848 homes, from 6,030 homes in the second half of 2021, the report shows.

As of June 30, the inventory of homes listed for sale on MLS increased by 85.8% to 1,193, from 642 at the same time last year. The average list price was $574,132, according to the report.

Meanwhile, the average selling price rose by 26.8% to $385,821, from $304,235. According to the report, the average selling price rose by 128.4% over the past decade and has outpaced the national inflation rate of 29.04% over the period.

“The Northwest Arkansas region is being challenged to provide affordable housing options for the continued increase in population,” Jebaraj said. “The pace of new home construction is slowing because of supply chain issues as builders are having difficulty getting new homes completed because of a lack of appliances while some new subdivisions can’t get the approvals they need because they can’t get the transformers needed to provide electricity. Hopefully, these are temporary issues that will get resolved soon. However, offering more affordable housing than other desirable metros is a competitive advantage that we are beginning to lose with the pace of price increases.

“This issue will not resolve itself, so I am hoping that the Regional Workforce Council will help by encouraging housing policy coordination between cities in the region. We simply have to increase the amount of housing options for current and new residents if we are to continue growing.”

According to the report, 2,892 residential building permits were issued in Northwest Arkansas in the first half of 2022, a 16.1% increase from the 2,490 permit issues in the second half of 2021. Over the same period, the average building permit value rose to $322,482, from $290,152.

Based on the absorption rate over the past year, 21.5 months of supply remains in active subdivisions in Northwest Arkansas.

Mark Ryan, executive vice president, and loan manager with Arvest Bank, said the bank’s real estate development and mortgage lending teams “are ready to provide the insight, guidance and investment capital needed to meet the demand for additional housing.”