Home sales down in state; prices up
Posted on Thursday, August 14, 2008
The slump in Arkansas home 1 sales has lingered for 2 / 2 years, with sales down 24 percent in June compared with June 2007 — but prices continued to increase, the Arkansas Realtors Association said Wednesday. There were 2, 391 homes sold June in the 42 counties surveyed by the association, about 760 fewer than the 3, 144 homes sold in June last year and the 30 th straight monthly decline.
The average home price in Arkansas was $ 164, 458, the highest level since the Realtors began releasing figures in 2005 and a 2 percent increase over June 2007.
Increasing prices do not bode well for an increase in home sales in the near future, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville.
“The way to speed [home sales ] along is to see a decline in prices,” Deck said. “Statewide, on average, that is certainly not what we are seeing.” There are several reasons why prices would rise as sales fall, Deck said.
“This is very area-specific,” Deck said. “You have to look at the individual dynamics of each economy.” One pressure keeping prices up is that it is still more expensive to build a house than it is to buy an existing home, Deck said. And some areas of the state are doing well, such as counties where the prosperous Fayetteville Shale is located, which would keep prices up there, Deck said.
“Generally, we have seen this national housing bust show up in Arkansas as a decline in sales rather than a decline in values,” Deck said.
Sales were down 30 percent in Pulaski County, where 416 houses were sold in June, almost 200 fewer than a year earlier. It was the biggest one-year drop in home sales in Pulaski County in more than two years.
Despite the drop, Pulaski County has been “holding up relatively well,” Deck said.
“Pulaski County is a metropolitan area where the economy has done OK in this downturn,” Deck said. “Pulaski County has been doing better than some other big metro areas [nationally ].” Sales were down almost 27 percent in Benton County and almost 25 percent in Washington County, the Realtors association said. Home prices were down 2. 3 percent in Benton County, but up 3. 6 percent in Washington County.
June is normally a relatively good month for home sales, said Scott McElmurry, chief operating officer at Bank of Little Rock Mortgage. McElmurry said he is becoming encouraged by sales of newly constructed homes in recent weeks. “Some of the larger houses that builders have had for sale for a year and a half or two years sold recently,” McElmurry said. “Three have sold in the last month.” One other large home on the market for more than a year in the upscale Chenal Valley area in west Little Rock recently sold, McElmurry said. The original list price was $ 1. 5 million, McElmurry said, but the seller finally dropped the price to $ 1. 275 million before it sold.
FORECLOSURES UP Meanwhile, foreclosures in Arkansas were up 2. 3 percent in July compared with July last year, according to information from Irvine, Calif.-based RealtyTrac that will be released today. Arkansas foreclosures were down 5. 2 percent in July compared with June this year. RealtyTrac estimated that there was one foreclosure in Arkansas in July for every 1, 193 houses in the state. “You’re probably seeing some things normalize a bit,” McElmurry said. “I’d be a little hesitant to say that we’re out of the woods.” McElmurry said a significant percentage of adjustable-rate mortgages were scheduled to reset to higher interest rates last March.
After getting a bill in April, it would take at least three months for a homeowner to miss payments before he might be pushed into foreclosure.
“I wouldn’t be surprised if nationally we see another uptick [in foreclosures ] in August or September,” McElmurry said.
Nationally, foreclosures were up 55 percent compared with July last year, RealtyTrac said.
But the increase was only 7. 8 percent compared with June this year.
“The longer that the economy goes sideways, the longer that consumer confidence remains muted and the more likely we are to see continuing high levels of foreclosures,” Deck said.
Bank repossessions continued to be the fastest-growing segment of foreclosure activity in July, posting a 184 percent year-over-year increase, James J. Saccacio, chief executive officer of RealtyTrac, said in a prepared statement.
“The sharp rise in [bank repossessions ], combined with slow sales, has resulted in a bloated inventory of bank-owned properties for sale,” Saccacio said.
RealtyTrac has more than three quarters of a million properties in its active bank-repossession database, which represents about 17 percent of the inventory of existing homes for sale nationally, Saccacio said.
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