If you’ve glanced at the news lately, you’ve probably seen the many headlines about the economy that impact home buyers and sellers. This data indicates that mortgage rates are trending up and home prices are on the rise, and the real estate markets in Central and Northwest Arkansas are no exception. While the northwest region of the state is well-known as a rapid-growth seller’s market, smaller communities throughout the state are also seeing similar market conditions.
Both Central Arkansas and Northwest Arkansas were seller’s markets in April 2022, which means that there are more people looking to buy than there are homes available. The challenge for homebuyers is finding a home in a market that lacks inventory, where they will likely pay a premium to acquire that home.
In Central Arkansas, there were 1,175 active home listings and 146 new homes for sale in May 2022. Homes were averaging 40 days on the market compared to 50 days last year. There were 1,202 homes sold in Central Arkansas in April 2022, up from 604 in April 2021. Meanwhile, Northwest Arkansas’ population growth has rocketed in the past five years, resulting in a much higher housing price increase during this same time in comparison to other areas of the state.
In April, there were 1,755 active home listings and 144 new homes for sale in Northwest Arkansas, and homes were averaging 49 days on the market compared to 28 days last year. There were 1,009 homes sold in Northwest Arkansas for April 2022, up from 355 in April 2021.
Residents of Northwest Arkansas are experiencing an unprecedented housing market, as the region’s quality of life and employment opportunities continue to draw population. The great success of global companies, national operations and regional ventures based in the area has for several decades driven its economic engine. That’s a double-edged sword, of course, as the record number of homes sold during the second half of 2021 — at record-high prices — creates new pressures on affordability and costs of living.
After the biggest surge in mortgage rates in 40 years, houses are now less affordable than they were at the peak of the 2006 housing bubble. This is likely to affect home sales and cool the pace of homebuilding for the remainder of 2022, according to a report from Fannie Mae. Not until next year do economists with Fannie Mae’s Economic and Strategic Research Group expect to finally see a “a large deceleration in home price growth,” with some regions likely to see price declines. While there’s a chance of a “modest recession” later this year or next, Fannie Mae economists don’t see a downturn of the magnitude of the Great Recession of 2007-09 on the horizon.
Across the state as well, a seller’s market continues to prevail. The median time that a property is on the market in the state is now 41 days. This represents a decrease of 13 percent in a year-over-year comparison; in 2017, the average number of days on the market was 110. This relatively short time on the market allows the seller to retain more control over the sale price with a higher demand for available inventory. Feeling the need to act quickly, buyers are continuing to see relatively tight inventory in Arkansas, with properties being snatched up in little over a month’s time.
On the bright side, homeowners in Arkansas have been able to realize a healthy 10.4 percent median home-value appreciation over the past year. While this increase is positive and reflects continued growth in the market, this increase in Arkansas real estate is approximately 5 percent slower than the average increase across the United States during the same period — approximately 16 percent.
This modest one of the remaining affordable markets overall, this modest increase indicates that the real estate market in Arkansas has plenty of room for growth in the coming years, but for now, remains a relatively affordable housing mecca.
Tina Sewell is the branch manager and a loan officer with Rock Mortgage in Fayetteville.
