Northwest Arkansas residential market still ‘hot’, but pace of growth hits the brakes

Year-to-date numbers in the Northwest Arkansas housing market indicate the pace of growth is slowing, in both unit sales and sales volume.

That’s according to the latest data provided by real estate agent Eric Harris with Crawford Real Estate and Associates in Lowell.

Combined in the two-county area there were 6,611 home sales in the first eight months of the year, essentially flat (a gain of 1.50%) from 6,513 home sales in the January-August period of 2016. Sales volume was $1.47 billion, up 6.64% from $1.38 billion in the same period of 2016.

In the same eight-month period from 2015 to 2016, unit sales were up almost 17%, and sales volume was up nearly 29%.

Mervin Jebaraj, an economist for the University of Arkansas, said the YTD data shows a regional housing market that is still considered hot. 2016, he said, was simply a “banner year” of sorts, so a slowdown in the pace of growth should not be all that unexpected.

Residential sales volume in Benton and Washington counties hit a combined $1.91 billion last year, up 21.6% from a sales volume of $1.57 billion in 2015 and a 37.4% increase from sales volume of $1.39 billion in 2014.

“Eventually, [home sales] have to give way somewhere,” said Jebaraj, the interim director of the Center for Business and Economic Research in the UA’s Sam Walton College of Business. “When you combine the home ownership rate, in general, is decreasing and more and more people are renting, it will have to give way.”

The national homeownership rate fell to 63.4% in 2016 — the lowest yearly average in 50 years, according to CoreLogic.

Jebaraj also noted “average” priced homes in the two-county area — $227,000 in Benton County and $210,000 in Washington County — are selling quickly.

“New homes are also not sitting on the market for a long period of time, unless they are really expensive,” he said. “Brand new homes are not sitting unoccupied, which would be a sign of weakness. We aren’t seeing that.”

As is the trend historically, the bulk of the residential activity through the first eight months of the year was produced in Benton County. Realtors there sold 4,165 units — 63% of the total — for a combined volume of $946.91 million. That compares to 4,061 home sales (up 2.06%) and sales volume of $896.81 (up 5.58%) in the January-August period of 2016.

Median home prices in Benton County were $192,250 through August, or $102.77 per square foot. Homes are also selling faster with a median days on market of 70 through August. That compares to 78 days on market in the same period last year.

In Washington County, agents sold 2,466 homes through August. Unit sales were essentially flat (up 0.57%) from a year ago. Home sales had a combined value of $530.39 million, up 8.57% from the January-August period in 2016.

Jan Holland, a licensed Realtor in Northwest Arkansas for nearly 14 years, also said 2016 was a peak year for a housing market that had been experiencing “swift and steady” incline for about five years, in both price and volume.

She said 2017 has been a transition year to more of a “leveling off” market.

“We have a lot more inventory coming online and we will start seeing a balancing out in the market,” said Holland, an agent with Coldwell Banker Harris McHaney Faucette in Bentonville. “The market historically runs in cycles and I think we are in a transition mode now, which has to happen to keep the market healthy.”

AUGUST NUMBERS
Realtors in Benton and Washington counties sold 919 homes in August, down 3.16% compared with the same month in 2016. Total sales volumes, though, were still positive. Total sales volume in the two-county area in August was $215.9 million, up 3.2% from $209.1 million in August 2016.

In Benton County there were 577 homes sold in August with a combined value of $135.34 million, down compared to 590 home sales worth $135.91 million in the same month last year. That reflects a 2.2% decrease in unit sales and a volume decrease of 0.4% from August 2016. The median home price in Benton County in August was $202,850, up 9.7% from a year ago.

Washington County agents combined to sell 342 homes for a sales volume of $80.57 million. That compares to August 2016 numbers of 359 homes (down 4.7%) for a combined volume of $73.23 million (up 10%). The median sales price in Washington County rose to $192,750 in August, up 15.17% from a year ago.

The most expensive home sold in August in Benton County sold for $1.05 million. It’s a five-bedroom, 5,358-square-foot residence built in 2014 in the gated Pinnacle Country Club neighborhood in Rogers. It was listed for $1.12 million and was on the market 232 days.

In Washington County, the most expensive home sale was a 575-acre mountain top ranch/resort in Winslow. It was listed for $1.49 million and sold for $1.10 million. It includes a 5,500-square-foot residence built in 1992.

HOME SALES (January through August)
Benton County
Unit Sales
2017: 4,145
2016: 4,061
2015: 3,504

Sales Volume
2017: $946.91 million
2016: $896.81 million
2015: $710.31 million

Median Sales Price
2017: $192,250
2016: $182,000
2015: $163,000

Washington County
Unit Sales
2017: 2,466
2016: 2,452
2015: 2,069

Sales Volume
2017: $530.39 million
2016: $488.48 million
2015: $397.92 million

Median Sales Price
2017: $178,220
2016: $165,000
2015: $163,000