Nearly 6,000 homes were sold in Benton and Washington counties in the second half of 2021, a record for the area, according to the latest Skyline Report.
The report, released Tuesday, said 5,934 homes were sold in the two most populous counties of northwest Arkansas, breaking the previous high of 5,726 from the second half of 2020. The 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 record number of homes sold came despite a significant increase in the average sales price. The average sale price of a Benton County home was $345,517, up 17.8% from a year ago and more than 55% from five years ago. In Washington County, the average sale price was $311,517, up 15.8% from a year ago and 54.5% from five years ago.
“Northwest Arkansas has been able to effectively compete against areas like Austin, Texas and Seattle, Washington because of our lower cost of living, but housing costs are the primary driver of that advantage,” said CBER Director Mervin Jebaraj. “We believe it is imperative that the major cities in the region accelerate efforts to [address] zoning and other issues impacting the ability for developers to build along the I-49 corridor. While regional efforts have begun toward this goal, we hope to see results of these efforts sooner rather than later.”
The Skyline Report said the region has a 23.5-month supply of lots in active subdivisions and more than 12,500 new lots have received preliminary or final approval. Those lots would push the supply of lots to nearly 69 months.
There were 1,600 new homes occupied in the second half of 2021, down 7.1% from the first half of 2021. There are more than 1,900 homes under construction, a 40.7% increase from 1,374 a year ago.
There were 584 homes listed for sale in northwest Arkansas, the fewest since 2009.
“Even with higher costs for materials and manpower, the pace of development is increasing to meet the increased demand, but the area will need even more homes constructed to keep pace with population growth,” Jebaraj said.
The report said that owner-occupied homes dropped to 63.5% in Benton County and to 61.7% in Washington County. The report didn’t clarify the previous percentages but said the rate of owner-occupied homes have declined since 2012.
The tight residential market has continued to spur activity in the multifamily market. The report said more than 4,400 units were added in the past year.
The average lease increased to $789.06 in the second half of 2021, up from $741.36 in the same span of 2020. The lease rate has increased 24% in the past five years.
The vacancy rate for multifamily dropped to 3%, down from 3.4% in the first half of 2021 and down from 5% in the second half of 2020.
Nearly $217 million in building permits for multifamily developments were issued in the second half of 2021, an increase from $204.5 million from the first half of 2021.
The report said 14,000 units are under construction or in planning. Rogers has the most new units planned with 4,600, followed by Bentonville with 4,100 and Fayetteville with 3,500; Springdale has 1,500 new units planned.