Arkansas’ residential real estate sector ended 2013 on a good note and the miserable winter weather of January was not enough to slow the pace of home sales in the state’s four largest markets.
The number of homes sold in Arkansas’ four largest metro areas totaled 20,644 during 2013, the first time since 2007 that the tally topped 20,000 and the first the value of the homes sold in the four markets topped $3 billion.
The City Wire’s Arkansas Home Sales Report captures home sales data in the state’s 14 most populated counties within the state’s four largest metro areas — Central Arkansas, Fort Smith area, Jonesboro/Northeast Arkansas and Northwest Arkansas. The report, which records closed sales, accounts for between 70% and 75% of total Arkansas home sales.
The report, which counts the number of sales closed in January, is sponsored by Fort Smith-based Weather Barr.
January home sales totaled 1,204, up 6.55% in the four markets. Although the combined home sales activity was up in all four markets during January, the combined average price was down. The average price per home in the four markets was $144,599, down 5.58% compared to January 2013, and down 8.03% compared to January 2012.
There were 577 homes sold in central Arkansas, up 3.96% compared to January 2013, and up 30.84% compared to January 2012.
January home sales totaled 393 in Northwest Arkansas, up just 0.26% compared to January 2013, and up 15.25% compared to January 2012.
Jonesboro area home sales totaled 122, up 17.31% compared to January 2013 and up 48.78% compared to January 2012.
In the Fort Smith area, home sales totaled 112, up 41.77% compared to January 2013, and up 43.59% compared to January 2012.
The value of the sales during January were down 3.68% in central Arkansas, up 0.47% in Northwest Arkansas, down 0.97% in the Jonesboro area, and up 44.29% in the Fort Smith region.
THE REGIONAL PICTURE: 2013
Central Arkansas — Home sales
January 2014: 577
January 2013: 555
January 2012: 441
Fort Smith area — Home sales
January 2014: 112
January 2013: 79
January 2012: 78
Jonesboro area — Home sales
January 2014: 122
January 2013: 104
January 2012: 82
Northwest Arkansas — Home sales
January 2014: 393
January 2013: 392
January 2012: 341
The top five counties in terms of January 2014 home sales:
Pulaski — 259, up compared to 238 in 2013
Benton — 253, up compared to 232 in 2013
Washington — 140, down compared to 160 in 2013
Saline — 105, up compared to 88 in 2013
Craighead — 98, up compared to 81 in 2013
Link here for a PDF document of the January 2014 data.
SALES, PRICES SHIFT
Perhaps one of the more perplexing things about the January report is that sales were up 6.55% compared to January 2013, but average sales prices were down by 5.58% – a drop of slightly more than $10,500 from the same time last year. More intriguing still is the fact that sellers didn't generally slash their asking prices for homes to attract buyers.
Pulaski County, for example, is typical in that regard. Sellers averaged 95.91% of their list prices for homes, a number that is slightly better than 95.88% a year ago. The size of the homes sold didn't decrease dramatically either, but the sales prices did. The average price per square foot of homes sold in Pulaski County was $74.38, significantly lower than $81.25 a year ago.
The City Wire Economist Jeff Collins said one can't read too much into January's numbers because it is just one month and factors such as cold winters keeping people from shopping for homes can skew the data a bit. He said it's safer to get the data from the first quarter of the year in place before looking for trends.
Still, he said one of the things driving the market could be that incomes haven't increased substantially, unemployment numbers have remained steady, and some people may be more cautious about taking on debt than they were a few years ago before the recession took hold. Those factors, he said, could add up to a situation where there is downward pressure on home prices – people are only willing to pay so much and sellers are simply adjusting to the market when pricing their homes.
The end result is no surprise, he said, which is that lower prices mean more homes are sold.
RENTAL DEMAND IMPACT
Jackie Twillie of Twillie Realty in Little Rock said it is difficult to pin down what exactly was driving markets in January. She said the numbers are coming up and people are still able to get loans, so that is good news and reflects well on the overall economy.
One phenomenon she's seen is that the cost of new homes dropped in 2013 a bit as builders rushed to meet the demand for mid-priced homes. At the same time, investors looking for deals on foreclosures snapped up a lot of homes and then turned those into rental properties. Twillie said the demand for rental homes is rising and that has prompted investors to start pulling foreclosed homes off the market to meet that demand.
The increased number of investors picking up homes for a bargain may have had a small impact on prices, she said. The same may be true of tight credit standards and slightly rising interest rates – factors that directly influence how much financing buyers can get when applying for mortgages.
Amber Gill of Exit Realty in Paragould said prices in the Jonesboro area may have been impacted by the popularity of the federal Rural Development program. Under that program, people are typically buying homes with no money down and, as such, sellers are holding stronger to purchase prices while still trying to list their homes at prices that will attract buyers.
She said there was a fear that the federal Rural Development loans would dry up in her area this year as the definitions were supposed to change so that cities with populations of more than 25,000 in the 2010 Census were to be removed from eligibility. Paragould was one of those cities that would have lost that eligibility, and Gill said the availability of Rural Development loans have helped attract buyers to that city.
At the end of January, however, Congress passed a measure that will keep all cities eligible for Rural Development loans in that program until Oct. 1. On that date, the population limits for eligibility will be raised from 25,000 to 35,000, meaning that areas where that mortgage program is offered will likely not see it vanish until at least 2020 when Rural Development definitions are to be considered again.