The number of homes sold in northwest Arkansas dropped more than 20% in the second half of 2022 compared to the previous year, according to the Arvest Bank Skyline Report.
The report, released Tuesday, said that 4,774 homes were sold in Washington, Benton and Madison counties. That represented a significant drop from 6,030 homes sold in the second half of 2021; 4,848 homes were sold in the first half of 2022.
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.
The average price of a home sold in Benton County was $401,875, down slightly from $403,829 in the first half of 2022 but still up from $345,517 in the second half of 2021. In Washington County, the average sale price was $376,018 in the second half of 2022, up from $362,924 in the first half of 2021 and from $311,572 in the second half of 2022.
“We have been saying for some time that home prices in Northwest Arkansas have needed to stabilize in order for the region to continue to be an attractive and affordable place to call
home,” CBER Director Mervin Jebaraj said. “I believe that the leveling of price increases are an opportunity for the market to potentially recalibrate at a more sustainable pace. In fact, it would likely be beneficial long-term if more developers took this as an opportunity to focus on building in the more affordable price ranges, which would mean further downward motion on average home prices.”
There were 2,115 home building permits issued in the second half of 2022, a drop from 2,892 in the first half of the year and down from 2,490 in the second half of 2021. The number of homes available for sale in the region was 1,618, up 177% from 584 in the second half of 2021.
The vacancy rates for multifamily units was 1.6% in the second half of 2022, down from 2.3% in the first half of 2022 from 3% in the second half of 2022. The report said the vacancy decrease was heavily affected by Fayetteville, which saw its vacancy rate drop from 3.5% to 1% during the course of 2022.
An increase in enrollment at the University of Arkansas was the primary reason as the other main cities in the region saw vacancies increase. Fayetteville represents more than 47% of multifamily units in northwest Arkansas.
Each of the five main cities have more multifamily units in development or under construction. Rogers leads the way with 6,000, followed by Fayetteville with 4,600, Bentonville with 3,600, Springdale with 2,200 and Siloam Springs with 300.
“The multifamily market in the region is still operating at a functional vacancy rate of zero, but there are a large number of new developments in the pipeline which are greatly needed,” Jebaraj said. “At the end of the day, we need to have housing, whether that’s homes or apartments that are affordable for those moving into the region.”