Arkansas Home Sales Dip For Fourth Consecutive Month, Prices Still Higher

Editor’s note: This is the September 2012 report of The City Wire’s Arkansas Home Sales Report. The report, released monthly, accounts for between 70% and 75% of total Arkansas home sales. The report is sponsored by Fort Smith-based Westark Plumbing.

Combined home sales in Arkansas’ largest markets were down more than 7% in September, the fourth consecutive month of declines in the important economic sector. Fortunately, the average home sale price was up more than 7.5% for the month.

There were 1,445 homes sold during September in the four large market areas measured by The City Wire’s Arkansas Home Sales Report, down 7.13% compared to September 2011, but up 7.51% compared to September 2010.

The City Wire’s Arkansas Home Sales Report captures home sales data in the state’s 14 most populated counties within the state’s four largest metro areas — Central Arkansas, Fort Smith area, Jonesboro/Northeast Arkansas and Northwest Arkansas. The report, which records closed sales, accounts for between 70% and 75% of total Arkansas home sales.

The total value of September homes sold in the four markets was $238.108 million, down just 0.16% compared to September 2011, and up almost 17% compared to September 2010. The average sales price of a home sold in the four markets during September was $164,781, well ahead of the $153,275 during September 2011.

METRO SWITCH
An interesting difference with the September report is that the Fort Smith and Jonesboro metro areas reported a gain in home sales, but the central Arkansas and Northwest Arkansas regions had declines. This scenario is often reversed.

September home sales were up 8.33% in the Fort Smith area (Crawford and Sebastian counties), and up 5.71% in the Jonesboro area (Craighead and Greene counties). Sales during September were down 8.22% in central Arkansas and down 12.93% in Northwest Arkansas.

Keith Meador, a veteran agent with King Weichert Realty in Fort Smith, said the busier pace was a welcome site after a tepid spring and summer selling season. He said prices continue to move higher which is better for sellers and enough to get buyers back into the market shopping.

“I am working with young buyers, some folks who recently moved into Fort Smith, a few investors and some homeowners wanting bigger houses for growing families. The demand is really spread between several groups,” Meador said.

Agents sold 288 homes in Benton County during September, down 7.69% from the same month in 2011. But the median sales price rose from $124,950 to $146,000 in the same period. Paul Bynum, a real estate market analyst with Mountdata.com, said this 16.8% rise in price is a clear indication of a better market for sellers.

Sales volume totaled $53.596 million in Benton County, up $4.366 million or 8.8% from a year ago.

Bynum says the seller’s market is the result of inventory levels in Northwest Arkansas down 18% from a year ago and at half of their all-time high in 2007. He said there is a 4-to-5-month supply of homes priced under $150,000, which clearly favors the seller.

JANUARY-SEPTEMBER TALLY
Regionally, the number of homes sold during the first nine months of 2012 are up in central Arkansas and Northwest Arkansas, and down in the Fort Smith and Jonesboro metro areas.

During the first nine months of the year, home sales in the four markets totaled 13,834, up slightly over the 13,774 in the same period of September 2011, and up 0.37% compared to the same period in 2010.

For the first nine months of 2012, the value of homes sold in the four markets totaled $2.255 billion, up 10.21% compared to the same period of 2011, and up 7.22% compared to the same period of 2010.

The average days on market for a home in the four combined markets during the first nine months of 2012 was 96.81, an improvement over the 101.1 during the same period of 2011.

REGIONAL FIGURES (Year-to-date)
Central Arkansas — Home sales
Jan.-Sept. 2012: 6,699
Jan.-Sept. 2011: 6,545
Jan.-Sept. 2010: 6,959

Fort Smith area — Home sales
Jan.-Sept. 2012: 1,228
Jan.-Sept. 2011: 1,291
Jan.-Sept. 2010: 1,357

Jonesboro area — Home sales
Jan.-Sept. 2012: 1,304
Jan.-Sept. 2011: 1,341
Jan.-Sept. 2010: 1,342

Northwest Arkansas — Home sales
Jan.-Sept. 2012: 4,603
Jan.-Sept. 2011: 4,597
Jan.-Sept. 2010: 4,125

MARKET OBSERVATIONS
Michael Pakko, University of Arkansas Institute for Economic Advance chief economist and state economic forecaster, said he had two reactions to the September housing market report – puzzled and disappointed.

“I really expected to see some pickup in sales this year, but there seems to be a lot of reasons to jump back in the market,” he said. “We’re not seeing that.”

Pakko said he expected sales to rebound in 2012. One problem, he said, might have to do with stricter credit limits.

Mortgage Bankers of Association of Arkansas officials said mortgages were generally closing within 30 days after buyers and sellers entered into real estate sales contracts, but that started changing a couple of months ago. The problem, mortgage bankers say, has to do with increased government and industry regulations. Those regulations stem from questionable lending practices that became obvious around 2008 and resulted in foreclosures and loan delinquencies that are still weighing on real estate markets.

Pakko said tighter lending requirements may be a reason average sales prices are on the rise. If the borrowers who would typically purchase mid-priced homes are being frozen out of the market by stricter credit requirements, then Pakko said it makes sense that higher priced homes are selling quicker as purchasers with better credit are able to obtain mortgages.

Pakko also said it is possible that markets are still being influenced by home buyer tax credits that ended in 2010 and lasted for two years. He said the program effectively “pulled demand from the future to the present” based on the notion that future demand would be strong enough to absorb the impact. We’re now in that future, Pakko said, and the demand for homes isn’t as strong as perhaps some analysts thought it would be.

Meanwhile, Pakko said one group that is taking advantage of current market conditions are people refinancing existing mortgages. As of Oct. 12, the mortgage rate on a 30-year mortgage was 3.57%. For those refinancing for 15 years, the rate was 2.87%.

POLITICAL, ECONOMIC CONCERNS
Paulette Richie, executive broker and branch manager with Coldwell Banker Rector Phillips Morse in Bryant, said she has noticed an increasing number of closing delays as of late. Additionally, she said potential borrowers are holding on to their money as they are still worried about the economy. Throw in an unemployment rate that remains high and you’ve got a situation in which consumers are more cautious than they were a few years ago, she said.

Richie said another factor she described as “odd” is that some consumers have chosen to wait to purchase homes until after the presidential election in November.

Sherlyn Blackwell, an executive broker with Fred Dacus Associates in Jonesboro, said it is not unusual for people to hold off purchasing homes during an election year.

“In all of my experience, when it’s an election year people are always more skeptical,” she said. “I think that’s factoring into it.”

Blackwell said her Jonesboro sales have increased slightly this year and attributes gains to a steady economy in the area and low interest rates.

“I’m doing much better this year than last year,” she said.