Skyline Report at 20: Strong Real Estate Trends Continue in Northwest Arkansas

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The residential and commercial real estate markets in northwest Arkansas remain strong as the region’s population growth continues.

The area, centered primarily around Washington and Benton counties, has seen its population streak past 560,000 after gaining more than 100,000 residents in the past decade. Northwest Arkansas’ population is expected to approach 1 million by 2045.

The number of homes sold in northwest Arkansas in the first half of 2024 increased 2.7% from the second half of 2023, according to the Arvest Bank Skyline Report. The report said 4,799 homes were sold in the first six months of 2024, 8.5% higher than the same period a year ago.

The Skyline Report is sponsored by Arvest bank with research conducted by the Center for Business and Economic Research at the University of Arkansas’ Walton College of Business. Arvest Bank held a banquet Thursday morning in Springdale to honor Skyline Report’s 20-year anniversary.

CBER Director Mervin Jebaraj said northwest Arkansas has seen the home prices rise as inflation rose this past year, when it was expected that rising inflation would have the opposite effect. The average sales price for a Benton County home was $432,956, a 2.5% increase from the second half of 2023. Washington County said the average home sale increase slightly less than 1% to $389,574.

In Benton County, home prices have risen 72.5% in five years. In Washington County, they have increased 65.4% over the same span.

In the multifamily market, vacancy rates stood at 3.3% in the first half of 2024, an increase of .2% from the second half of 2023. The area saw 11 new apartment complexes completed during the year that put more than 1,000 new units on the market.

The average lease was $1,037.57, up 9%. The area has another 5,400 units under construction.

“The overall housing market in northwest Arkansas for both homes and apartments continues to be robust with a high percentage of newly constructed homes and multifamily units being built and absorbed,” Jebaraj said. “However, affordability of housing remains a major concern.

“Over the past five years home prices have increased 72.5% in Benton County and 65.4% in Washington County while average apartment lease rates increased 48.9%. We are concerned that these rates of housing inflation will have to moderate for continued and sustainable growth.”

In the commercial segment, the vacancy rate remained unchanged at 6.4%. This was despite more than 548,000 SF of new commercial space becoming available in the market.

The Skyline Report breaks down the commercial market into seven subsets, and six of them saw their vacancy rates decrease from the second half of 2023. The warehouse segment had a vacancy rate of 8%, up from 3.2% as more than 313,000 SF of new space entered the market.

The report said there was $409.6 million in commercial building permits issued in the first half of 2024, an increase from $287.6 million in the second half of 2023. Of the $409.6 million, just $700,000 was issued to Walmart Inc. of Bentonville, a company that has a multimillion-dollar home office project under construction.

The non-Walmart permit amount was the highest recorded in the region in the past 20 years.

“Looking back at 20 years of commercial real estate data in northwest Arkansas is very interesting when you consider that the amount of leasable space has grown from just under 10 million square feet to more than 52 million,” Jebaraj said. “And to be able to say that the commercial market is very healthy in the first half of 2024 is a testament to the area’s growth and intelligent development.”