Arkansas stands out as affordable housing market, industry study shows

Arkansas seems to be resisting national trends revealing fewer Americans can afford to buy a house. The state, bolstered by wage increases in major metropolitan areas, remains generally affordable.

Soaring interest rates, low housing inventory and rising prices for single-family homes are pressuring buyers across the nation. Those forces have led to an affordability crisis in 98% of the counties in the U.S., though home buying in Arkansas is reasonable compared with the rest of the country.

Wage increases are outpacing increases in home prices in Central, Northeast and Northwest Arkansas, according to an analysis from Attom, which compiles and assesses the performance of the nation’s real estate markets.

Nationwide, however, U.S. home prices and mortgage rates are running up faster than incomes, creating an affordability crisis.

Americans are devoting about 33% of their wages — the highest ever level — to home ownership. Yet Arkansans in the state’s top three urban regions need to use less than 30% of their income to cover monthly mortgages.

Mortgage rates more than doubled last year and have settled, for now, below 7%, though the Federal Reserve Bank has hinted more increases may be on the way. The Fed has raised the benchmark rate 10 times in just more than a year.

“The U.S. housing market has done an about-face following a downturn that threatened to usher in an extended period of flat or falling prices,” said Rob Barber, Attom’s chief executive officer. “With that has come another blow to how much house the average worker around the country can afford. Whether this is just a temporary blip amid this year’s peak buying season or a sign of another extended price surge is anyone’s guess.”

Attom’s home affordability index measures the percentage of wages needed to handle a mortgage payment. That’s up to 33% nationally compared with a historic ratio of about 28%.

In Central Arkansas, the average home buyer would devote 21.5% of wages, which average $59,926, to buy a median priced home of $195,000. Year-over-year wage increases were up 4.4% at the end of June while home prices were up 2.6%.

Northwest Arkansas, based on average wage and real-estate prices, appears to be one of the more affordable regions in the state. Wages are up 3.2% to an average of $73,346 and home prices have ticked up just 0.5%. Area residents have to dedicate 29% of wages to a monthly mortgage.

Fort Smith homebuyers need to budget about 21% of their $51,857 in annual income to a mortgage. In the past year, wages are up 5.3% and home prices have skipped up 13%.

It’s different in Northeast Arkansas, where prices fell nearly 2% over the past year while wages were up 4.6%. Workers in the Jonesboro region spend about 23.4% of their income on a mortgage.

Freddie Mac, a secondary mortgage buyer, reported last week that the average rate on

the benchmark 30-year home loan rose to 6.71% from 6.67%. A year ago, the rate averaged 5.70%.

Shrinking housing inventories also are stirring up market volatility, the Fed noted in an analysis last week. From March 2022 to April 2023, residential construction outlays have declined 18.4%.

However, there are indications the housing market may have bottomed out. Home sales and housing starts are up in the first six months of this year.

Reflecting that, home builder confidence in the economy and the housing sector market rose in June for the second straight month. Builders were bolstered by growing demand, low inventory of existing homes and improvements in delivery of materials, according to a survey by the National Association of Home Builders.

June was the sixth straight month that builder confidence has increased and is the first time that a positive outlook has climbed above the midpoint of 50 since July 2022.

“Builders are feeling cautiously optimistic about market conditions given low levels of existing home inventory and ongoing gradual improvements for supply chains,” said association Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala.

PITCH ‘N PINT WINNERS

Kingdom Made Treats of North Little Rock was the big winner last week in the Little Rock Venture Center’s Pitch ‘N Pint competition, with the mobile catering service taking home $5,000 in cash.

The company is owned by Tim Turner and his wife, Tameka.

Charles Gilmer of Stout Stallion, a mobile bar service for special events, took second place, winning $3,000 in the Shark Tank-like pitching competition that also was sponsored by the Little Rock Regional Chamber of Commerce.

Plug and Scrub, a dishwashing product, and its owner John Dick came in third and won $2,000. The community prize of $100 went to Gary Plummer of SAP’s Creole Cuisine, a Maumelle restaurant.

“Pitch ‘N Pint is a celebration of vision, innovation, and entrepreneurial spirit,” said chamber President and Chief Executive Officer Jay Chesshir. “By offering seed funding and networking, we not only bolster individual visions but also fuel our collective economic future.”

GOODWILL EXPANDS JOBS TRAINING

Goodwill Industries of Arkansas will open a training and education center in Springdale later this month for adults who want to finish their high school diploma or obtain industryspecific credentials and certifications.

Opening ceremonies are scheduled for 11 a.m. July 19 for the 32,000-square-foot campus at 2100 S. Old Missouri Road. Adults interested in joining a program also can attend a tour and tailgate party from 11 a.m-2 p.m. July 20.

“This campus will further expand the delivery of our mission of changing lives through education, training and employment in Northwest Arkansas,” said Goodwill President and Chief Executive Officer Brian Marsh. “More than 320,000 Arkansans over the age of 19 are without a high school diploma and the workforce in our state needs skilled labor.”

The Springdale center, modeled after similar operations in Little Rock, will offer classes to finish a high-school degree and skills-training programs to help participants find jobs.