Skyline Report notes ‘significant’ growth in Northwest Arkansas residential market

The number of homes sold and the number of building permits for home construction in Northwest Arkansas indicate a housing market that is growing and going against national trends, according to the latest Skyline Report.

The report, made public on Tuesday (March 25) and presented by Arvest Bank, provides data on the Northwest Arkansas — Benton and Washington counties — single-family and multifamily residential market in the second half of 2024. The report is compiled by the Center for Business and Economic Research (CBER) at the Sam M. Walton College of Business at the University of Arkansas.

Skyline data indicates there were 5,339 homes sold in the second half of 2024, up 14.2% from 4,674 in the second half of 2023 and the third highest number of home sales since the inception of the Skyline Report two decades ago. There were 2,058 newly constructed homes sold during the period, which is the highest number in Skyline’s history. New construction homes accounted for 38.5% of all home sales.

“The resiliency of the Northwest Arkansas housing market is very evident in this report as home sales surge and the apartment market continues to add significant new units while the vacancy rate remains low,” said Austin Otwell, vice president and commercial banker at Arvest Bank-Springdale Region.

The number of building permits issued in the second half of 2024 was 3,007, the highest number recorded since 2006. The number, according to the Skyline Report, suggests ongoing growth despite being lower than 2023 numbers. Homes in the construction phase totaled 1,622 in the second half of 2023 and 1,133 in the second half of 2024.

CBER Director Mervin Jebaraj said Skyline data shows the region is not following the national trend.

“While home sales in 2024 were being negatively impacted nationally by higher interest rates, Northwest Arkansas is showing continued strength with significant growth in sales,” Jebaraj said. “Like other markets, many homeowners are choosing to remain in their homes to avoid increasing their mortgage interest rate, and this is leading to fewer existing homes being for sale. However, strong population growth is fueling new homes being built, and this is driving growth in overall sales.”

He did say smaller towns in the region face “infrastructure limitations” that may force new residential construction elsewhere.

The regional vacancy rate for apartments (multifamily housing) in the second half of 2024 was 3.3%, up from 3.1% in the first half of 2024. The slight gain in the vacancy rate resulted from six new developments that added 506 units in the second half of 2024, according to the Skyline Report. At the end of 2024, there were over 7,300 new apartments under construction and another 21,100 announced.

“Even with a large number of new apartments coming into the market, the vacancy rate continues to be low. … With fewer existing homes available, the percent of households in Northwest Arkansas living in apartments is steadily increasing,” Jebaraj said.

Following are other findings from Tuesday’s Skyline Report.

• In the second half of 2024, the average price of a home in Benton County reached $449,750, 3.9% higher than the first half of 2024, 7% higher than a year ago, and 69.6% higher than five years ago.
• The average Washington County home price was $402,322, 3.3% higher than the first half of 2024, 4% percent higher than a year ago, and 67.2% higher than five years ago.
• In the second half of 2024, the average lease rate per month for a multifamily property unit in Northwest Arkansas increased to $1075.18, from $1037.57 in the first half of 2024.
• The Fayetteville multifamily vacancy rate increased to 3% in the second half of 2024 from 1.9% in the first half of 2024. More than 2,500 new rental units are under construction and an additional 6,700 have been announced (36.3% of current inventory) in the Fayetteville market.
• Multifamily vacancy rates in Bentonville fell 4% in the second half of 2024 from 4.5% in the first half of 2024. More than 1,800 new rental units are under construction and an additional 5,400 have been announced (70.7% of current inventory) in the Bentonville market.
• Vacancy rates in Rogers dipped to 5.3% in the second half of 2024 from 6.9% in the first half of 2024, the highest in Northwest Arkansas. More than 1,500 new rental units are under construction and an additional 6,700 have been announced (87.6% of current inventory) in the Rogers market.
• The Springdale vacancy rate fell to 1.9% in the second half of 2024 from 2.9% in the first half of 2024. More than 1,400 new rental units are under construction and an additional 700 have been announced (22.8% of current inventory) in the Springdale market.
• In the second half of 2024, 31 current multifamily projects had building permits valued at $523.8 million, an increase from $363.6 million in the first half of 2024.
• 21,237 total lots in 360 active subdivisions were identified by Skyline Report researchers in the second half of 2024. An additional 17,381 residential lots received either preliminary or final approval in Northwest Arkansas.