Housing construction in the Little Rock metropolitan area hit a 14-year high in 2021, and despite a hot market, homes in the area remained among the most affordable in the nation.
Metroplan, the region's long-range planning agency, said in a new report that the median cost of new single-family homes in the Little Rock metro jumped 11% last year after being adjusted for inflation. But costs for owners and renters were still about 25% below the national average. Compared to other mid-size metro areas, Little Rock homeowners' monthly mortgage payment was $1,220 on average, or fifth lowest in the U.S.
The region ranked slightly lower in affordability, which Metroplan measured by comparing costs to income. More than 56% of homeowners spent under 20% of their income on housing, leaving the Little Rock region ranked ninth among all mid-sized metro areas.
The Fayetteville metro area ranked first by that criteria. Homes are more expensive in northwest Arkansas, but the average income is higher, according to the report.
Both areas ranked higher in affordability than similarly-sized metros including Baton Rouge, Louisiana; Chattanooga, Tennessee; Knoxville, Tennessee; Tulsa, Oklahoma; and Jackson, Mississippi.
Construction ramps up
Metroplan counted 3,391 new housing unit starts in 2021, the highest total since 2007.
Construction of new single-family units totaled 1,908, also the highest since 2007, according to the report.
The greatest increase last year was in North Little Rock, which saw new single-family starts more than double from 87 to 180.
Little Rock permits rose 40% from 347 to 517. In Benton, starts increased 44% from 224 to 322.
Multifamily starts in the region totaled 1,483, above average but not record-breaking. Little Rock saw 783 apartments started, compared to 517 single-family units.
North Little Rock gave permits to 440 new multifamily units, mainly in a large public project on West 19th Street.
Conway came in third with 226 new units located south of Dave Ward Drive. Cabot saw 60 new units and Bryant gave permits to several duplexes.
But as mortgage rates rise and inflationary pressures continue, single-family housing construction appears to be slowing, the report says.
"Higher rates will also increase uncertainty in multifamily and other construction activities," the report says. "It appears the post-COVID housing boom is ending."