New home permits rally in September, cap off a solid third quarter

Builders across Benton and Washington counties secured 205 permits for new homes last month to keep them busy for the rest of the year – which is 100 more new starts than recorded a year ago.

The permit values issued in September by cities of Bentonville, Fayetteville, Rogers and Springdale totaled $41.74 million, up 69% from the $24.688 million reported a year ago. Builders were most active in Bentonville and Fayetteville with 57 permits and 75 permits  respectively issued last month, accounting for 63% of the region’s total. 

Following are city permit tallies for September.
Bentonville: 57 permits worth $15.314 million, up 45%
Fayetteville: 75 permits worth $19.91 million, up 379%
Rogers: 16 permits worth $3.269 million, down 48%
Springdale: 12 permits worth $3.247 million, down 13%

September activity capped off a modest third quarter gain. Third quarter residential building permits totaled $102.13 million among the four cities in this report, up 2.2% from the $99.92 million reported a year ago.

Builders secured 449 permits for new homes between July 1 and Sept. 30. This compared to 399 issued in the same period of 2013. Residential building activity declined year-over-year in months of August and July, but the strong rally in September, led by Bentonville and Fayetteville tipped the scale toward a small gain.

The most recent Skyline Report (Oct. 15) indicates that there are 385 active subdivisions in the two-county area. In 95 of those there has been no new or existing construction anytime this year.

Building permits were flat through the first half of 2014, compared to same period last year, with Cave Springs and Centerton bucking the trend, according to the Skyline report.

The Bentonville School District continues to be a major draw for builders because 31.3% of the homes sold in the region during the first half of this year were in Bentonville’s Schools District which includes, Cave Springs, Centerton and Bella Vista. Rogers School District accounted for the second highest number of sales at 18.2%, according to report.

“The stabilization in building permit values along with continued brisk absorption of new construction means that we’re not seeing the kind of buildup of new housing inventory that could cause future headaches,” said Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas. “Builders seem to have consumer demand in mind when they bring the new houses to market.”

Mountdata.com reports new home prices through the third quarter averaged $110 per square foot, compared to $105 per square foot a year ago. 

Real estate professional Philip Taldo expects the price will rise higher in 2015 as developers begin to turn over more dirt for lot platting. The cost difference for new development versus existing repossessed lots purchased from area banks is likely to raise new home prices by $10 per square foot, he said.

COMMERCIAL SECTOR
The region’s commercial building sector ebbs and flows from month to month with September permit activity being lighter than the prior two months. There were 10 new commercial projects among the four cities and five permits for multifamily (4.79 million) in Fayetteville. The total of these permits issued in September was $17.402 million. 

New commercial projects on tap include:
Bentonville: 
Frank Lloyd Wright House reconstruction, 610 Museum Way, $337,184
Peel Mansion Garden Room/Greenhouse, 320 S. Walton, $150,000

Fayetteville:
Office Building, 4762 N Castlewood Lane, $610,647
Retail Shell, 1438 E. Augustine Lane, $2.097 million
Office Building, 1420 E. Augustine Lane, $1.312 million

Rogers:
Mount Carmel Community of Rogers Assisted Living, 2200 W. Laurel, $7.416 million
Anduril, 3702 Southern Hills Blvd., $180,000
Crossings Nail Salon, 2600 Pleasant Crossings, $90,000
Tyson Foods new engine room, 400 W. Olrich, $280,000

Springdale:
Health Clinic at Elmdale Elementary, $139,239

Commercial permits totaled $92.13 million in the third quarter with September being the slowest of the past three months. Permit values in the commercial sector, including multifamily, rose from 234% from $27.553 million in the third quarter of 2013.

All of the cities in this report indicated heightened commercial activity this year over last.