Construction, Price Gains Small But Steady In Housing Market
Skyline Report charts first half of 2014
FAYETTEVILLE, Ark. (Oct. 16, 2014) – Steady, incremental growth was the story of the Northwest Arkansas residential real estate market during the first half of 2014, according to the Skyline Report released by Arvest Bank today.
"The first half of 2014 was marked by continued forward movement in the residential sector," said Kathy Deck, lead researcher for the Skyline Report at the Center for Business and Economic Research at the Sam M. Walton College of Business, University of Arkansas at Fayetteville. "Building permit activity was up modestly, prices remained relatively stable, and sales of homes were at a sustainable pace."
Residential building permits issued in the first six months of 2014 showed a modest increase over the same period of 2013. There were 1,183 building permits issued in Benton and Washington counties from January through June of 2014, a 3.0 percent increase from the 1,149 building permits issued during the same period of 2013 and an 8.1 percent increase from the 1,094 building permits issued in Benton and Washington counties from July through December of 2013. Benton County accounted for 746 of the residential building permits, while Washington County accounted for 437.
The average value of all building permits in Northwest Arkansas from January through June of 2014 was $235,890, up 0.3 percent from the average value of $235,101 reported in the same time period of 2013 and down 3.6 percent from the average value of $244,575 reported from July through December of 2013.
"The stabilization in building permit values along with continued brisk absorption of new construction means that we're not seeing the kind of buildup of new housing inventory that could cause future headaches," Deck said. "Builders seem to have consumer demand in mind when they bring the new houses to market."
Sales of existing houses on the market were up in both Benton and Washington counties but the sold prices are mixed compared with the end of 2013. From January 1 to June 30, 2014, there were 3,122 houses sold in Benton and Washington counties, an increase of 2.3 percent from the 3,051 sold in the same time period of the previous year.
The average sold price of Benton County homes during the first half of 2014 was $188,084, up 2.2 percent from the average sold price of $183,983 at the end of 2013. In Washington County, the average price of existing homes sold was $184,132, down 1.3 percent from the average sold price of $186,493 at the end of 2013.
Home values, as measured by the average cost per square foot of existing homes sold during the first half of 2014, increased 2.8 percent in Benton County to $84.58 from $82.29 at the end of 2013. In Washington County, the average cost per square foot of existing homes sold in the first half of 2014 was $89.24, up 1.6 percent from the average cost per square foot of $87.87 reported at the end of 2013.
Only 1,067 newly constructed but unoccupied houses became occupied during the first six months of 2014, down 16.4 percent from the 1,279 new houses in active subdivisions that became occupied during the second half of 2013. But that number was still an increase of 34.0 percent from the 796 new houses that became occupied during the same period of 2013.
Jennie Hill, senior vice president and real estate manager for Arvest Bank in Benton County, said small positive movements in residential housing in Northwest Arkansas are indicative of a market that is responding to demand.
"The whole residential real estate market is beginning to find its feet again in recovery. After a few tentative steps in a positive direction, it is moving more confidently but cautiously," Hill said.
A total of 27,620 lots were in the 385 active subdivisions identified by Skyline Report researchers in the first half of 2014. Of these lots, 9,498 were classified as empty, 170 were classified as starts, 696 were classified as being under construction, 222 were classified as complete but unoccupied, and 17,034 were classified as occupied. In 95 of the 385 active subdivisions, no new construction or progress in existing construction has occurred during the last year.
The Arvest Skyline Report is a biannual analysis of the latest commercial, single-family residential and multifamily residential property markets in Benton and Washington counties. The report is sponsored by Arvest Bank and conducted by the Center for Business and Economic Research in the Sam. M. Walton College of Business at the University of Arkansas (CBER).
In 2004, Arvest Bank entered into a contract with CBER to collect information about the local real estate markets. CBER researchers aggregated and analyzed data from local governments, property managers, visual inspections and the business media to provide a complete picture of the status of property markets in the two counties.
The Center for Business and Economic Research at the Sam M. Walton College of Business provides excellence in applied economic and business research to federal, state and local government, as well as to businesses currently operating or those that desire to operate in the state of Arkansas. The center further works to improve the economic opportunities of all Arkansans by conducting policy research in the public interest.