Skyline Report Shows Balanced NWA Real Estate Market

by Sarah Campbell  on Wednesday, Mar. 8, 2017 11:06 am  

In northwest Arkansas, supply kept pace with demand as residential building permits and new homes being occupied increased almost equally, according to Arvest Bank's Skyline Report for the second half of 2016.

The supply of remaining lots and the number of complete but unoccupied houses also continued to fall, the report said.

Kathy Deck of the Center for Business and Economic Research at the Sam M. Walton College of Business at the University of Arkansas, is the lead researcher of the report, which is sponsored by Arvest. She called the residential real estate market "as hot as we've seen it since the recession."

"Given the increase in building permits we've seen during the past 12 months, it is quite impressive that the absorption of newly constructed homes has kept pace," she said in a news release. "The market was equally hot prior to the recession, but at the end of 2006 there were more than 2,500 complete but unoccupied houses on the market and now there are fewer than 300. We hope that this balance is sustainable moving forward."

But Deck warned that two factors could slow the pace of absorption: forecasts for slower job growth in the area and the price of remaining lots.

More: Click here to see the complete report.

There were 1,638 building permits issued in Benton and Washington counties from July 1 through Dec. 31, a 37 percent increase from the same period of 2015 and a 4.9 percent increase from January to June 2016.  

There were also 1,574 new homes sold in the last six months of 2016, indicating a good balance of new homes being built and new homes being purchased, the report said.

The average value of building permits in northwest Arkansas was $221,867, down 7.1 percent from the average value reported in the second half of 2015 and down 2 percent from the average value reported from January to June 2016.

In total, 4,772 homes were sold in Benton and Washington counties during the last six months of 2016, an increase of 12.1 percent from the same time period of 2015.

But the number of new homes being occupied increased 37.6 percent, according to the report. 

The average sales price of Benton County homes during the second half of 2016 was $221,944, up 7.4 percent from the second half of 2015. 

In Washington County, the average price of existing homes was $201,804, up 6.7 percent from the same time period of 2015.

Centerton, in Benton County, was a "hotbed" of building activity, according to the report. The city experienced a nearly 50 percent year-over-year increase in permits and had the third-highest figure of all cities in the region. The report said 288 houses were sold there — up 46.9 percent from the second half of 2015.

The report indicates there is a 35-month supply of remaining lots in active subdivisions in the region, the lowest level since the Skyline Report was first produced in 2004. But an additional 6,666 residential lots have received either preliminary or final approval in the two counties. Adding those proposed lots extends the supply to 64-and-a-half months, the report said.

"During the next several years, expectations are that interest rates will rise slightly, but we keep reminding customers that even if rates increase slightly, they will still be very, very low from a historical perspective," said Craig Shy, executive vice president and loan manager for Arvest Bank in Fayetteville. "The best news is that, in a balanced market like this, it is generally good for both buyers and sellers, as is evidenced by the large number of both new and existing homes that sold during the last half of 2016."

 

 

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