Northwest Arkansas Democrat-Gazette
Skyline report shows NWA home sales continue decline
FAYETTEVILLE — Home sales declined in Northwest Arkansas in the second half of 2023, continuing a trend that started in 2022.
Total home sales in the second half of 2023 fell by 2.1% from 4,774 to 4,674 in the second half of 2022, according to the Skyline Report sponsored by Arvest bank.
When compared with the second half of 2021, the decline in home sales was 22.5%.
The average price of residential homes in the region dropped overall as well, from $322,576 to $305,283 from the first to second half of 2023.
In Benton County the average price of a home was $420,114 in the second half of 2023, up 4.5% compared to $401,875 in the second half of 2022.
Washington County’s average price was $368,695 in the second half of 2023, an increase of 2.8% from $376,162 in the second half of 2022.
From the first half to the second half of 2023, Bentonville and Rogers showed price decreases from $470,532 to $448,263 and $351,739 to $298,779 respectively.
However, some municipalities in the region saw average prices increase, with an average Fayetteville home rising in price from $320,516 to $353,262.
Centerton, Cave Springs, Elkins and Gentry also saw increases over the course of 2023.
The homes on the market that sold were made up of 39.9% of new houses, which was the highest percentage since the inception of the report, with the new homes selling at an average price of $399,782.
Mervin Jebaraj, director of the Center for Business and Economic Research at the Sam M. Walton College of Business at the Universi
ty of Arkansas, said the high percentage of new builds indicates a couple of market trends.
“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,” he said. “Secondly, many new home developers are offering assistance by paying points that reduce a loan’s interest rate.”
Gene Gates, executive vice president and loan manager with Arvest Bank of Fayetteville, said the higher mortgage interest rates are affecting the housing market in Northwest Arkansas.
“At the same time, the region continues to grow in population, and we continue to see a healthy market to help customers with mortgages,” he said. “We are also working with apartment developers to secure the funding they need.”
A result of the higher interest rates is that the inventories of existing homes for sale have risen, according to the report.
At the end of 2021, there were 584 homes for sale, with the number increasing to 1,618 for sale at the end of 2022 and 2,119 for sale at the end of 2023, which represents a 263% increase over two years.
Tim Moldenhauer, a Broker-Owner for Remax Associates, said it is still a seller’s market in the region, despite the increase in inventory.
Moldenhauer explained that the 584 homes for sale in 2021, was so low and even in today’s market real estate agents wish for more inventory.
“There is still enough buyer demand to handle the inventory that is on the market,” he said.
Based on sales in the last six months, Moldenhauer gave an example of Fayetteville
in theory would run out of homes for sale in 2.6 months if listings dried up.
Moldenhauer said clients have been interested in the new construction homes as they come with financial incentives that make the purchase easier, making it a big part of his business.
“Not only do you have a new product, you have a payment that is more appetizing than a resale,” he said.
Multi-family homes were also a part of the report, with a vacancy rate of 3.1%, an increase of just under one percentage point from 2022.
The report stated there were 10 new apartment complexes entering the market, adding 1,700 new units.
Despite this, rental rates continue to climb, with an average lease rate moving above $1,000 per month for the first time.
Jebaraj added that while the vacancy rate increased, it is still low when compared nationally. With the new complexes, he said it will take some time to get the new units leased up.
“I suspect the vacancy rate today is lower than it was at the end of the year,” he said.
Regional coordination and rezoning on U.S. 71B was a point Jebaraj made at how the issues can be solved. He said denser housing growth near city centers would be beneficial.
“As the region continues to grow [in] population, a coordinated approach to redevelopment among the four big cities would go a long way towards solving many of the housing issues and disruptions from unplanned growth we are experiencing,” he said.
The Arvest Skyline Report is a biannual analysis of the latest property market trends in Benton, Washington and Madison counties, sponsored by Arvest Bank and conducted by the Center for Business and Economic Research at the University of Arkansas.