The number of homes sold in northwest Arkansas dropped 2.1% in the second half of 2023 compared to the second half of 2022, according to the Arvest Bank Skyline Report released Tuesday.
The report said 4,674 homes were sold in Washington, Benton and Madison counties, down from 4,774 sold in the same half-year of 2022. While down from a year ago, home sales are up from the first half of the year when 4,422 homes were sold.
Home sales have dropped 22.5% since the second half of 2021.
New construction accounted for 39.9% of the homes sold in the second half of 2023, the highest percentage the Skyline Report has found. The report said there are now 2,119 available homes in the region, up from 1,618 in 2022 and up from 584 in 2021.
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.
“The increasingly high percentage of new builds indicates a couple of market trends,” said CBER Director Mervin Jebaraj. “One is that current homeowners are less likely to make an in-market move because of higher interest rates as most people don’t want to replace a 3.5% mortgage with one at 7.0% or higher.
“Secondly, many new home developers are offering assistance by paying points that reduce a loan’s interest rate. Some homebuilders might also be helping buyers with other incentives like including appliance packages with new homes.”
The average sales price for homes sold in Benton and Washington counties, the two most populous of the region, continue to rise. In Benton County, the average price was $420,144, up 4.5% from a year ago and 71.5% from five years ago.
The average Washington County price was $386,695, up 2.8% from a year ago and 69.5% from five years ago.
The report said there were 21,530 lots in 371 subdivisions in northwest Arkansas with another 15,239 in the development pipeline.
The vacancy rate was 3.1% for multifamily units in northwest Arkansas, an increase from 2.2% in the second half of 2022. The average lease for a multifamily unit surpassed $1,000, reaching $1,005.40, up from $952.17 in the first half of 2023.
The lease rate is up 27.4% from two years ago when it was $788.95.
“While the multifamily vacancy rate increased, it is still very low nationally,” Jebaraj said. “And with so many new complexes entering the rental market toward the end of the year, it takes some time for new properties to get leased up. I suspect that the vacancy rate today is lower than it was at the end of the year.”
Fayetteville, the home of the University of Arkansas’ flagship campus, had the lowest vacancy rate at 1.7%, which was up from 1.2% in the first half of 2023. The report said 550 new units were under construction and another 5,500 have been announced.
Bentonville’s vacancy rate was 4.9%, up from 3.2%, with 1,400 new units and another 4,400 announced. Rogers’ vacancy was 6.6%, up from 3.6%, with 1,900 new units and 5,700 announced.
Springdale saw its vacancy rate drop to 2% from 2.5% with 440 new units and another 1,600 announced.
The report said there were $256.4 million in multifamily permits in the second half of 2023, down from $263.1 million in the first half of 2023.
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