More homes were sold in Northwest Arkansas in the last six months of 2019 than in any half-year period recorded in the last 15 years, and the price of those homes continues to increase, according to a new report released by Arvest Bank in concert with the UA’s Center for Business and Economic Research at the Sam M. Walton College of Business.
The bank’s bi-annual Skyline Report, which began in 2004 as an internal report to keep up with the market in order to mitigate risk for the bank’s loan officers, was released to the media this week.
According to the report, a total of 4,910 homes were sold from July-December of 2019, the highest half-year amount recorded since the report began in 2004. The total of 9,657 homes sold in 2009 is also the highest annual total recorded.
The number of available lots for building homes in the region, however, fell to 23.3 months, down 60.9% in the last five years, the lowest amount recorded since the report began keeping track.
The average price of homes listed for sale in the region is increasing, the report says. List prices in the Multiple Listing Service (MLS) in Benton and Washington County are up by more than $100,000 in the last five years, from $273,676 in 2014 to $379,342 in the same period in 2019 for a 38.6% increase.
Mervin Jebaraj, director of the Center for Business and Economic Research (CBER) at the Sam M. Walton College of Business at the University of Arkansas, said the current trends are in line with the reports the center has produced in recent years.
“The residential market in the region continues to demonstrate strength in its ability to absorb a large amount of newly constructed homes,” Jebaraj said. “At the same time, the number of existing homes listed for sale has declined steadily over the past five years. The bottom line is that there continues to be a strong demand for homes throughout Northwest Arkansas.
“On the supply side, building permits are up more than 20% year-over-year and more than 77% over the past five years. So, in the short-term builders and developers seem poised to meet the strong demand. It will be interesting to see how many new developments will become active in order to meet future demand as the current supply of lots for future building has fallen to its lowest level since the Skyline Report began.”
Multi-family vacancies rose in the region from 3.5% to 4.9% during the study period, but Jebaraj said that is likely due to the recent completion of some large complexes, particularly in Bentonville. Those new apartments, he said, are likely to be reabsorbed by the market soon, and he expects those vacancy rates to drop quickly.
The Skyline Report is compiled from a variety of sources, including public data, data from the MLS, information provided by residential and commercial real estate brokers, and from information collected by UA students who drive active subdivisions in pairs to observe their statuses, and compile them using iPads provided by the department.
Chris Thornton, Arvest EVP and loan manager in Springdale said the findings of the report line up with his recent experience.
“This report indicating a record number of homes sold in 2019 isn’t surprising to our mortgage lending team across the region,” he said. “As the largest home lender in the area, we also had a record-breaking year in the number of mortgages originated. Looking ahead, we will be working and consulting with our real estate development partners to ensure they can continue to meet the current and future demand for homes while maintaining a healthy balance in the market.”
Additional highlights from newly released Skyline Report
Data reflects second half of 2019
– There were 1,857 building permits issued in Benton and Washington Counties from July 1 – Dec. 30, 2019. Benton County accounted for 1,121 of the residential building permits, while Washington County accounted for 7.35
– 24,831 lots were in the 426 active subdivisions identified by the Skyline Report researchers in the second half of 2019
– In 74 out of 426 active subdivisions, no new construction or progress in existing construction has occurred during the last year.
– During the second half of 2019, 1,461 new houses in 426 active subdivisions became occupied, down 7.4% from 1,576 in the first half of 2019.
– Using the absorption rate from the past twelve months implies that there was a 23.3 supply of remaining lots in active subdivisions in Northwest Arkansas at the end of the second half of 2019
– An additional 8,985 residential lots have received either preliminary or final approval in Northwest Arkansas. Adding these proposed lots to those in active subdivisions yields 58.9 months of remaining lot inventory
– According to the Assessor’ databases, 64.9 percent of houses in Benton County and 62.2 percent of houses in Washington County were owner-occupied
– From July 1-Dec. 31, 2019, there were 4,910 houses sold in Benton and Washington County. This is an increase of 3.3 percent from the 4.747 sold during the same time period in the previous year.
– The average sale price of a house in Benton County was $264,383 in the second half of 2019. In Washington County, the average sale price was $241,413
– There were 1,812 houses listed for sale in the MLS database as of Dec. 31, 2019, at an average list price of $379,342