NORTHWEST ARKANSAS, (KNWA/KFTA) — Inflation and supply chain issues continue impacting construction costs— which fall in the pockets of homebuyers and some cities.
Leon Hall is the owner of Tara Nova Construction and a real estate agent with Keller Williams Market Pro Realty. He said construction costs are driving up the cost for homebuyers in Northwest Arkansas.
“Between 2018 and 2021, we saw a 42% increase in the cost of a single family home, Hall said.
According to a Bank of America report, $35,000 of the 42% increase was attributed to material costs.
“We’re dealing with steel going up— the second increase at least in the last 12 months. Concrete locally here remains high,” Hall said.
According to Hall, mortgage rates continue going up. It’s taking about 10 days more than last month to sell a home. In some contracts, sellers are accepting some concessions, covering some costs that the buyers would normally cover.
“We’re seeing the seller accept inspections and picking up some of the closing costs, things like that,” said Hall.
Homebuyers aren’t the only ones dealing with higher prices due to material costs. Cities are feeling the pain as well. Paul Becker, the Chief Financial Officer for the City of Fayetteville, said they’re having to make financial adjustments due to the unforeseen cost of construction.
“We’re talking about value engineering or cutting back on certain areas that we’ve been looking at,” Becker said.
Some of the city projects costing more than expected are the new police station, a parking deck in the Cultural Arts Corridor and improvements to razorback road.
“We’re looking at increases in the 30% or higher range. As a matter of fact, Razorback Road, we had that at over 80%,” Becker said.
Despite the high prices, the city is still moving forward with bond projects, and Northwest Arkansas residents are still buying homes.
The active listings for Keller Williams Market Pro in May was around 1,351. Right now, there are about 628 active listings.
“Yeah, people are still buying them. You know, a lot of the new construction homes are being sold directly from the buyer,” Hall said.
Hall said if you’re looking to buy a home, you should make sure you’re hiring a professional for the complex purchase. You can find out more about buying a home in the current market by calling Leon Hall with Terra Nova Construction and Keller Williams Market Pro Realty at 479-259-2171.