Arkansas Housing Market Sees Sales and Construction Decrease

There was optimism within the Arkansas housing market after sales dropped in October.

We wonder if the same attitude prevails now that final figures for real estate sales and building growth were down for all of 2006, as released by the Arkansas Realtors Association in Bella Vista.

Last year, there were 1, 165 housing units sold in Bella Vista compared to 1, 536 in 2005, a 24 percent drop. With prices rising, Arkansas mortgage applicants chose to wait on the sidelines for most of the year.

Benton County as a whole experienced less of a drop with 4, 856 housing units sold in 2006 compared to 5, 557 in 2005 - only a 13 percent change - and average home prices reached $ 194, 713 overall.

Bentonville saw 877 units sold last year, just a 4 percent drop from 2005, while the average home price reached $ 234, 893.

Those figures are down from 2005, a year which many in the real estate business consider was the best year on record for sales, said Ethan Nobles, director of media relations with the ARA.

“Washington and Benton counties are down. There’s no doubt, ” Nobles said. “However, the average prices are also going down in northwest Arkansas. That is an encouraging sign. ”

A buying boom in this area in recent years led builders to flood the market, many times with larger sized houses that carried higher prices.

“There was a time when those homes sold extremely well. I still don’t think we are in a buyer’s market yet, ” Nobles said.

Builders are reacting to the market change with a shift toward more affordable housing while offering incentives to buyers such as price adjustments, attractive home warranties and home additions such as privacy fences.

“I think we have a great potential for affordable housing in this area, ” said Larry Kelly with Kelly and Associates Realty. “ With an absorption rate of the current supply projected to be 14 to 18 months, we’re about seven to eight months into that supply. It’s really not out of whack. I think our market is still healthy, and I expect an increase in activity starting in the spring. ”

The number of people moving into northwest Arkansas and the number of jobs created continue to increase, so the demand hasn’t diminished. It probably has more to do with the decision-making of the buyers, the time they choose to apply for mortgage loans in the area.

“It doesn’t seem to matter what political party is in power. Folks are reluctant to make decisions during election years. I’ve noted it my entire career, ” Kelly said.

Despite the downturn in the housing market, Benton County continues to be the second largest county in the state as far as housing units sold, second only to Pulaski County’s 5, 918 units sold last year. The average price for a home in Benton County was the highest in the state in 2006.