New Home Construction Drags in Third Quarter

New home construction in Northwest Arkansas has declined by nearly 75 percent in the past three years.

There were 409 homes under construction during the third quarter of 2009, compared to 1,600 homes under construction in 2006, according to the third quarter residential Skyline Report.

Kathy Deck, director for the University of Arkansas’ Center for Business and Economic Research said Northwest Arkansas was a different world in 2006 in terms of the real estate market.

“We were at the peak of population growth and affordable interest rates, there was the feeling that the market had been underserved for some time and there was a recognition that Northwest Arkansas was on its way up,” she said. “In 2009, we’re in a completely different place, the market is overbuilt and we’re in a much tougher financing environment.”

The trend is in line with a nationwide decline in housing starts. Home construction fell 10.6 percent in October, according to he National Association of Homebuilders.

The number of building permits issued, an indicator of future building activity, has declined by nearly 60 percent since 2006.

In the third quarter of 2006, 870 residential building permits were issued compared to 361 permits issued in the third quarter of 2009.