ARKANSAS, USA — Arvest Bank is sharing its Skyline Reports for the first half of 2023, giving insight to real estate in Northwest Arkansas.
The reports show a record-breaking number of new construction homes sold.
Experts say the new homes usually make up less than 30% of total sales, but this year, that number has increased to 40%.
Mervin Jebaraj with the University of Arkansas Center of Business and Economic Research says the reason for the increase is not because more new homes are being constructed than usual, but because newly built homes are often the only option available for buyers.
“What we’re seeing now since the interest rates have gone up significantly is that people with homes currently are not particularly interested in selling their house, if they plan to continue living in Northwest Arkansas, because if they do, they might be able to get the price they are asking for, but they're going to pay 3 to 4% higher in the interest rate,” Jebaraj says.
He adds that because of soaring mortgage rates, more newcomers to the area are opting to rent instead of buy homes.
“In previous years, you might see a lot more people moving to the region and then buying a house immediately. That's less likely to happen [now]. So you're seeing a little less demand for buying homes and a lot more demand for renting, which is why the rental vacancy rate is extremely low in Northwest Arkansas and rents continue to climb,” Jebaraj said.
Chris Thornton with Arvest says if you’re looking for a home right now, it may take time.
“The journey where you put a house, and it sells quickly is still out there. But for those that are buying, you may not be the first or second option, because you've got a lot of people there. So [have] patience, keep at it, and then really get ahead of the game with your information from people early in the process as well,” Thornton said.
As mortgage rates remain high, Jebaraj says rental demand will too.
“They'd much prefer to rent for a year or two and wait to see if the mortgage rates come down and then buy at that point,” Jebaraj said.
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