Home sales fall 22% in state
Posted on Friday, October 20, 2006
URL: http://www.nwanews.com/adg/News/170183/
Arkansas home sales in major markets dropped more than 22 percent in September compared with September 2005, the Arkansas Realtors Association said Thursday.
It was the seventh straight month that home sales have declined in Arkansas compared with last year, according to the association, although the 22 percent drop-off is the biggest onemonth fall this year. In the five largest markets, declines ranging from 13 percent to 39 percent were reported.
The average home-sale price in Arkansas during September was the lowest since June, although it was 4. 5 percent higher than in September 2005, the association’s report said.
For the first nine months of the year, however, Arkansas home sales are down only 1. 74 percent compared with the same period last year. Sales were strong in February and then tailed off as the state joined a nationwide trend of slowing sales. The state figures are based on 30 markets that report sales to the association and don’t include homes sold by owners without a Realtor being involved.
There were almost 40 percent fewer homes sold last month compared with a year earlier in Benton County, the second-largest housing market in the state. The state’s largest market, Pulaski County, reported 13 percent fewer homes sold in September than in the yearago month.
“I think this is the same as we’re seeing nationwide,” said Kathy Deck, associate director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville. “There is no doubt that the demand for housing is softening, both nationwide and in Arkansas.”
The decline is due to mortgage rates, which are a little higher than the past few years, and a “general sense of uneasiness when it comes to the real estate market,” Deck said Thursday.
“Folks are really in a waitand-see mode,” Deck said. “We’ve had this terrific run-up in values over the past couple of years. The question is how long can it last.”
David Lereah, chief economist for the National Association of Realtors, said in a prepared statement last week that even with the recent slowdown, the national housing market is showing signs of life.
“Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices,” Lereah said. “Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year.”
Analysts say publicity about a potential housing price bubble and the possibility it will burst may be a contributing factor to the current slowdown. Until this year, Arkansas houses generally had become more expensive since the start of the decade, although the increases were nothing like those seen in areas like California and Florida.
“It’s all about consumer confidence,” Deck said. “In this case, the media’s attention certainly exacerbates the issue, but the same thing was true [when home sales were soaring ]. There is a psychology to investing. When it is good, everybody is on that bandwagon. And when it starts to turn, certainly you can get a downward trend exacerbated by the [publicity ].” COMING OFF RECORD YEARS
Deck pointed out, however, that home sales this year are being compared with the two best years for home sales in history. More homes were sold nationally last year than in any year before, breaking a record set in 2004.
“Numbers this year look a lot like 2003 numbers,” Deck said. “Certainly we are down from last and anybody who is a Realtor or who is getting into the market is feeling the pain. But we’re down from the best sales ever. And this could be a slow couple of years ahead of us.”
Sales of new homes were up almost 6 percent nationally in August, the Commerce Department said Wednesday. But for the year, new residential construction still is off 18 percent compared with the same period last year, according to the Commerce Department. Figures separating new and existing home sales in Arkansas weren’t available.
The Arkansas Realtors’ report showed the average home sale price in Arkansas in September was $ 151, 773, up 4. 5 percent from $ 145, 185 in September 2005. But the average in September is down 4. 4 percent from $ 158, 709 in August and lower than any monthly average since June.
INVENTORIES HIGHER Home prices are dropping “because there is so much inventory,” said Jonie Burks, an agent with The Charlotte John Co. in Little Rock. “Sellers are having to take less for their homes because it’s a buyers’ market,” Burks said. She gave an example of west Little Rock home she sold recently that listed for almost $ 380, 000 but sold for $ 365, 000, almost 4 percent less than the asking price. “That’s typical,” Burks said. “Buyers know they can get a home for less than the list price because sellers need to sell and there are more homes on the market.” She said she expects the decline in prices to continue in November and December, because they typically are slow months for home sales.
“I think basically what is happening is that the market is evening out, getting back to where it needs to be,” Burks said. In Benton and Washington counties, the inventory of newly built homes is climbing, Deck said. There are about 2, 000 new homes in Benton County that are completed but unoccupied, and about 500 in Washington County, she said. The increase in inventory continues even though a net gain of more than 1, 000 people a month move to Northwest Arkansas, Deck said. Washington County had the highest September average home price at more than $ 202, 000, the only market with an average price above $ 200, 000.
STATE ON EVEN KEEL Arkansas’ housing market is known for being less volatile than many large metropolitan markets nationwide. “Arkansas is still doing pretty well compared with other states,” said Debbie Rawls, executive broker of Dickinson & Associates Real Estate in Paragould and the 2007 president of the Arkansas Realtors Association. “We’ve stayed busy here. There may have been a slowdown in new homes, but [Paragould ] has approved two or three new subdivisions to be built. In fact, if you need someone to do odd jobs, forget it. The builders are still building new homes.”
Randy Alexander, owner of McKay and Co. in Little Rock, said there is a slowdown, but he doesn’t think there is a crisis in the Arkansas housing market.
“I think what is happening is that we’re probably taking a breather,” Alexander said. “The market still seems to have momentum in it, although it is not at the same pace of a few months ago.”
Houses still are affordable, he said, because mortgage rates still are relatively low, in the range of 6 percent.
“And from a buyers’ perspective, there is plenty of inventory,” Alexander said.