FAYETTEVILLE, Ark. (KNWA/KFTA) — Arvest Bank’s Skyline Reports on residential and multifamily real estate in Northwest Arkansas for the first half of 2021 shows low inventories and rising prices indicating a market straining to keep pace with job and population growth trends.
According to a news release from the bank, the number of complete but unoccupied new homes for sale at the end of June was 154, the lowest level since 2012, while the number of homes listed for sale on MLS was 607, the lowest level since 2009.
At the same time, the vacancy rate for apartments fell in all major cities in the region, with the overall vacancy rate at just 3.4%.
The release says prices are increasing faster than wages due to the addition of constrained supply of housing units with high demand.
The average sales price of homes in Benton and Washington counties rose 16.2% from the first half of 2020, moving from $263,461 to $301,236.
Arvest says five years ago, the average sales price for a home was $212,323, a five-year increase of 44.2%.
The average price to lease an apartment rose 5.4% from the first half of 2020, moving from $729.42 to $768.48 and has risen 26.4% since 2016 when the average lease was $608.05.
Mervin Jebaraj, director of the Center for Business and Economic Research at the Sam M. Walton College of Business at the University of Arkansas, said there is concern long-term about housing affordability.
“There are several reasons why the Northwest Arkansas region is ranked so highly in national surveys of the best places to live and housing affordability is one of the key factors,” Jebaraj said. “As a region, we need to address the fact that housing costs are rising faster than incomes. The housing market nationwide is experiencing many of these same factors, but in Northwest Arkansas we are seeing these factors reach a very rapid pace. Changing local zoning rules could help address the issue of accelerating land costs which play a significant role in driving higher home prices.”
“Looking at the pipeline of future housing, it’s good to see a significant increase in building permits issued, but the supply of available lots for new home construction is at its lowest level since we began measuring this in the Skyline Report in 2005. For those who cannot find a home suitable for their specific situation to buy, they are moving into multifamily developments where vacancy rates are at historically low levels even with so many new units entering the market over the past few years,” he concluded.
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 CBER.