Residential Building Activity, Absorption Increase in 2016
FAYETTEVILLE, Ark. (Oct. 20, 2016) – Arvest Bank today released the residential real estate market Skyline Report results for the first half of 2016 in Northwest Arkansas, which noted that building permits issued increased while the supply of remaining lots continued to fall, and the number of complete but unoccupied houses remains low.
The Northwest Arkansas residential lot supply again recorded its lowest level since 2007, with 46.1 months of supply, compared to 48.3 months' supply available at the end of 2015.
"Although there is a great deal of new supply of new housing in Northwest Arkansas, demand conditions remain robust," 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. "In a fast-growing economy like the one we are experiencing, it is not unusual to see supply outstrip demand slightly. At this point, inventories remain low, so there is some room for an increase. Prices have been increasing over the past few years, so the increased pace of building may help keep home prices affordable as the selection of available properties increases."
There were 1,561 building permits issued in Benton and Washington counties from Jan. 1 through June 30, 2016, a 14.9 percent increase from the 1,359 building permits issued during the same period of 2015 and a 30.5 percent increase from the 1,196 building permits issued in Benton and Washington counties from July through December in 2015. Benton County accounted for 1,036 of the residential building permits, while Washington County accounted for 525.
The average value of building permits in Northwest Arkansas from January through June 2016 was $226,466, down 3.5 percent from the average value of $234,753 reported in the same time period of 2015 and down 5.2 percent from the average value of $238,907 reported from July to December in 2015.
The sales price of existing houses on the market was up in both Benton and Washington counties compared with the second half of 2015. The average sales price of Benton County homes during the first half of 2016 was $218,482, up 5.8 percent from the average sales price of $206,575 during the second half of 2015. In Washington County, the average price of existing homes was $202,894, up 7.3 percent from the average sales price of $189,093 in the second half of 2015.
Home values, as measured by the average cost per square foot of existing homes sold during the first half of 2016, increased by 4.6 percent in Benton County to $97.89 from $93.60 during the second half of 2015. In Washington County, the average cost per square foot of existing homes sold in the first half of 2016 was $97.67, up 3.1 percent from the average cost per square foot of $94.75 reported during the second half of 2015.
In total, 4,373 existing homes were sold in Benton and Washington counties during the first six months of 2016, an increase of 16.1 percent from the 3,768 sold during the same time period of 2015.
"With economic growth and low unemployment in Northwest Arkansas, families are needing homes," said Dax Moreton, senior vice president and loan manager for Arvest Bank in Prairie Grove. "We at Arvest Bank are ready to help them buy the home of their dreams. Mortgage programs and construction loans are all very affordable right now, and we are ready to help everyone find the one that works best for their financial circumstances."
Researchers continue watching the lot inventory and new plats as they are submitted to area planning agencies. A total of 27,357 lots were in the 375 active subdivisions identified in the Skyline Report during the first half of 2016. Of those lots, 7,473 were classified as empty, 224 were classified as starts, 823 were classified as being under construction, 302 were classified as complete but unoccupied and 18,535 were classified as occupied. Of the previously unoccupied houses, 1,152 became occupied during the first half of 2016, up 0.7 percent from 1,144 in the second half of 2015.
Using the absorption rate from the past 12 months implies that there is a 46.1-month supply of remaining lots in active subdivisions in Northwest Arkansas, the lowest level since 2007. However, an additional 5,539 residential lots have received either preliminary or final approval in the two counties. Adding those proposed lots extends the supply to 75.1 months.
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 (CBER) in the Sam. M. Walton College of Business at the University of Arkansas.
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 CBER 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.