The housing market in Northwest Arkansas slowed in the second half of the year, with the number of home sales dropping but home prices gained ground when compared with the same period a year ago.
According to the Skyline Report sponsored by Arvest Bank, home sales in Benton, Washington and Madison counties dropped to 4,774 in the second half of 2022, down from 6,030 when compared with the same period a year ago, a decline of 21%. Sales are down slightly when compared with the first half of the year at 4,848.
Housing prices were up in all three counties when compared with the second half of 2021 but saw smaller gains when compared to the first half of the year, and even declined in one county.
In Benton County, the average sale price for the last half of 2022 was $401,075, up 16% from $345,517 for the same period a year ago but down 0.5% from $403,829 for the first half of 2021. In Washington County the average home price was $376,018, up 22% from $311,572 for the second half of 2021 and up 4% from $362,924 for the first half of 2022. Madison County's average sale price for the second half of 2022 was $248,773, up 15% when compared to $216,079 for the same period a year ago and up 4% when compared to $238,463 for the first half of the year.
In an interview Tuesday, 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 sales were less robust when compared to nearly 30% gains in the first half of the year, but overall they are still strong and comparable to gains seen in 2021.
"It's growing at a slower pace and puts us in a place we desperately need to be," he said of housing prices.
He said one of the key factors that makes Northwest Arkansas attractive is its cost of living, of which housing prices are a key component. Keeping housing costs affordable to all income levels and having homes available for buyers should be the primary goal, he said.
Tara Limbird, principal broker and co-owner of Rogers-based Limbird Real Estate Group, said in an interview Tuesday that inflation costs and economic uncertainty in recent months, along with climbing mortgage rates, have slowed sales in the short term, but she added, in her experience, prices are holding up well because of the area's tight inventory. Limbird noted when housing prices are looked at year over year, the region still is seeing a significant increase.
Last week, mortgage buyer Freddie Mac reported the average rate on the benchmark 30-year mortgage climbed to 6.73% from 6.65% the week before. The average rate a year ago was 3.85%.
The Skyline Report also tracks the areas multifamily market, with the overall vacancy rate for the second half of the year coming in at 1.6% compared with 3% for the same period a year ago. The first half of the year had an overall vacancy rate of 2.3%. For the last half of the year the Fayetteville market's vacancy rate was 1%, down from 3.4% for the same period a year ago and down from 3.5% for the first half of the year. The Fayetteville segment makes up nearly 50% of the area's multifamily market.
"The multifamily market in the region is still operating at a functional vacancy rate of zero, but there are a large number of new developments in the pipeline, which are greatly needed," Jebaraj said in a statement. "At the end of the day, we need to have housing, whether that's homes or apartments, that are affordable for those moving into the region," he said.
The Skyline Report examines the residential, commercial and multifamily real estate market in Benton, Washington and Madison counties. Researchers at the University of Arkansas' Center for Business and Economic Research compile data for the report. Arvest Bank first sponsored the Skyline Report in 2005.