Skyline Reports: Housing market still strong in Northwest Arkansas

The number of homes sold in Northwest Arkansas fell by 3.5% to 5,153 as multifamily vacancy rose by 2.5 percentage points to 5.8% in the second half of 2025 from the same period in 2024, according to the Skyline Reports released Tuesday (March 17).

The region has been bucking national trends of steep declines in home sales, while the multifamily vacancy rate remains below 6%, a metric considered healthy nationwide. In 2025, multifamily projects in Northwest Arkansas had building permits valued at more than $1.06 billion.

Fayetteville-chartered Arvest Bank released the Skyline Reports on residential and multifamily real estate in Northwest Arkansas for the second half of 2025. The reports are completed by researchers at the Center for Business and Economic Research (CBER) at the Sam M. Walton College of Business at the University of Arkansas.

In the second half of 2025, the average home price in Benton County increased by 4.8% to $471,427 from $449,750 in the same period in 2024. That’s up 60.6% from five years ago. The average Washington County home price rose by 6.8% to $429,616 from $402,322 and was 59.7% higher than five years ago. In Madison County, the average home price increased by 0.7% to $262,711 from $261,008 and was 26.1% higher than five years ago.

The number of home sales in the second half of 2025 was down from 5,339 in a period when home sales were the third-highest since the Skyline Report started, the report shows. Home sales in the second half of 2025 were up 10.2% from 4,674 in the second half of 2023.

The number of home building permits issued in Northwest Arkansas fell by 9.5% to 2,720 in the second half of 2025 from 3,007 in the same period in 2024. CBER researchers attributed this to builders being cautious about speculative homes in a high-rate environment. This was also reflected in a decline in the share of newly constructed homes sold relative to total homes sold.

Existing home sales were a key component of home sales in the second half of 2025, as sales of newly constructed homes declined by 12.1% to 1,809 from 2,058 in the second half of 2024. The 2025 number was also down from 1,864 in the same period in 2023. New homes comprised 35.1% of the sales in the second half of 2025. It was the lowest total and percentage in the past five Skyline Reports.

CBER Director Mervin Jebaraj attributed this to existing homeowners starting to accept that rates have returned to historical norms.

“In spite of the high mortgage rates, more than 10,000 homes were sold in both 2024 and 2025,” Jebaraj said. “What we are seeing is that the interest rate lock-in is beginning to fade, and those who have delayed selling their homes and buying larger or nicer homes since rates began to rise are beginning to feel OK about upgrading.”

He said the Northwest Arkansas real estate market is strong and balanced because people are still moving to the area. “As long as our region continues to grow in population, we should be able to have a healthy real estate market,” he added.

However, one area challenge is that several cities are struggling to build enough infrastructure to keep up with growth.

“The residential developers we interviewed expressed concern about how sewer capacity issues have limited growth in several areas,” he said. “This could be a significant issue in some of the smaller communities, but we are thankful that there seems to be momentum to address infrastructure needs in the region’s larger cities.

“One of the issues that we would like to see addressed is the modernization of building codes, which may be a state government issue. We need to look at updating building codes for both single and multifamily homes because construction methods have improved significantly over the past years while our building codes haven’t changed to account for these improvements. This could help developers get more housing on the market and potentially drive down costs.”

The addition of 15 apartment complexes, comprising 1,494 units, has contributed to the multifamily vacancy rate rising to 5.8% from 3.3% in the second half of 2024. However, the vacancy rate remains below 6%, which is considered healthy nationwide, Jebaraj said.

In the second half of 2025, the region had 27 multifamily projects with building permits valued at $632.5 million, up from $436.6 million in the first half of 2025. The average multifamily rent increased to $1,127.20 per month in the second half of 2025 from $1,094.08 in the first half of 2025.

“We are seeing many new, high-end complexes that began construction after the pandemic come online now,” Jebaraj said. “The market for these newer units is becoming more competitive as developers offer attractive incentives to attract renters, which, in turn, helps improve affordability. We expect to see healthy competition in the coming months, which is beneficial for renters.”

The Arvest Skyline Report is a semiannual analysis of commercial, single-family residential, and multifamily residential property markets in Benton and Washington counties. Sponsored by Arvest Bank, the report features research conducted by CBER. The report was started in 2004.

“It is very positive to see that our residential home market has remained balanced and healthy through a period of time that has been challenging for many other regions,” said Jason Carter, mortgage lender at Arvest Bank – Siloam Springs. “People are still moving into the area and needing a place to live. The inventory of new and existing homes available is strong, and the options for those looking to rent is more competitive than it’s been in some time.”

Link here for the residential report. Link here for the multifamily report.