The number of residential homes sold in northwest Arkansas decreased nearly 20% in the first half of 2022 from the last six months of 2021, according to the latest Skyline Report.
The report, released Tuesday, said 4,848 homes were sold in Washington, Benton and Madison counties, down from a record 6,030 in the second half of 2021. The average sales prices of those homes skyrocketed nearly 27% to $385,821 from $306,236 in the second half of 2021.
The report said home prices have risen more than 128% from a decade ago. As recently as the first half of 2020, the average home sale in the region was $263,461.
The Skyline Report is sponsored by Arvest Bank with research conducted by the Center for Business and Economic Research at the University of Arkansas’ Sam M. Walton College of Business.
Home sales were down in Benton and Washington counties, the most populous of the region, to 4,775; nearly 6,000 were sold in the two counties in the second half of 2021. The average Benton County sale was $403,829, up from $345,517 in the second half of 2021 and from $311,333 in the first half of 2021; Washington County had an average sale price of $362,924, up from $311,517 and $297,343 in the same periods.
Owner-occupied houses dropped in the region from the second half of 2021, to 62.5% in Benton County and 62.1% in Washington County. The report said those percentages have declined since 2012, although there was a slight uptick in the first half of the year, from 61.7%, in Washington County.
“The northwest Arkansas region is being challenged to provide affordable housing options for the continued increase in population,” said Mervin Jebaraj, the director of CBER. “The pace of new home construction is slowing because of supply chain issues as builders are having difficulty getting new homes completed because of a lack of appliances while some new subdivisions can’t get the approvals they need because they can’t get the transformers needed to provide electricity.
“Hopefully, these are temporary issues that will get resolved soon. However, offering more affordable housing than other desirable metros is a competitive advantage that we are beginning to lose with the pace of price increases.”
The report said there were 1,193 homes listed for sale on MLS in the region, up from 642, with an average listing price of nearly $575,000. Building permits were up, with 2,892 issued with an average value of $322,482 in the first half of the year, compared to 2,490 at $290,152 in the second half of 2020.
The report said there was a 21.5-month supply of lots in active subdivisions but another 13,092 lots were in the development pipeline, which would increase the supply to 66.5 months.
“We simply have to increase the amount of housing options for current and new residents if we are to continue growing,” Jebaraj said.
The residential market price increases are spilling over into the multifamily segment. The report said the average lease rate for northwest Arkansas apartments was $860.87 in the first half of 2022, up from $789.06 in the second half of 2021.
The vacancy rate in the area dropped to 2.3% in the first half of 2022, which is “functionally zero,” Jebaraj said. The rate was 3% in the second half of 2021 and 3.4% in the first half of that year.
The vacancy rates for the four major cities of the region were all down except for Fayetteville. Rogers’ rate was the lowest at 0.8%, down from 4% in the the second half of 2021; Bentonville was at 1.4%, down from 3%; Springdale was at 1.2%, down from 1.3%; and Fayetteville was a 3.5%, a slight uptick from 3.4% in the second half of 2021.
Each of those cities have multifamily units in the development pipeline, either planned or already under construction: Rogers with 5,600, Fayetteville with 4,400, Bentonville with 3,200 and Springdale with 2,500.