NWA Real Estate: Bloom or Doom?

Feb 21, 2024

As the spring season is upon us in Northwest Arkansas, the real estate market is again at the forefront of local and national conversations. Northwest Arkansas continues to attract a diverse population, driving demand in the housing sector. The real estate market’s conditions can be gauged by analyzing pending and closed sales data, offering insights into future activity and current market health. Let’s take a NWALook at local & national statistics from Pre-pandemic (2019), 2023, and January 2024. 

 In January 2024, Northwest Arkansas reported 869 pending sales, a slight increase from 828 in January 2023 and a more noticeable rise from 835 in January 2019. This represents a year-over-year growth of approximately 4.9% from 2023 to 2024 and a 4.1% increase from the pre-pandemic year of 2019 to 2024, indicating a healthy market despite broader economic uncertainties.

Closed sales also reflect this positive momentum, with 532 homes closing in January 2024 compared to 492 in January 2023 and 537 in the Pre-pandemic era of January 2019. There was an 8.1% increase year over year and a slight decrease of 0.9% from 2019, suggesting a market that has not only recovered but, in many ways, exceeded pre-pandemic activity levels. 


As you can see in the graph above, the number of closed sales over the past five years increases throughout the Spring month.

January 2019 had an average closed price of $195,431; by 2023, it increased to $325,500; in January 2024, the average home closed for $340,450, indicating year-over-year growth. Since 2019, homes in Northwest Arkansas have increased an average of 42.5%. As you can see in the graph below the close sales price has continued to increase month over month. 

Active listing inventory is another leading factor in indicating the market conditions and the future outlook. As of January 2019, we had  3,657 homes on the market. As of January 2024, we have 3,195 active listings. This is still 12% below pre-pandemic, although this is a 3.5% increase from 2023. 

Let’s look at the active listings over the past five years in the graph below. As you can see, from January through March, there is a stagnant number of listings and a gradual increase in April and May. We expect to see the same patterns this year, with a gradual increase in the number of active listings.

 

The Federal Reserve’s recent policy actions, aimed at tempering inflation by adjusting interest rates, have undoubtedly sent ripples through the real estate market nationally. Despite these efforts to cool down what was described as a “white-hot housing market,” Northwest Arkansas has demonstrated remarkable resilience. Price indices from 2023 across the board show positive growth nationally, ranging from four to six percent yearly. This growth trajectory is mirrored in the local market, buoyed by the region’s strong economic fundamentals, including job creation, an influx of new businesses, and a steady stream of newcomers drawn to the area’s quality of life.

As we look ahead to the spring selling season in Northwest Arkansas, the data points toward a market characterized by cautious optimism. The incremental increases in pending and closed sales signal a healthy demand, likely spurred by the region’s economic resilience and its appeal to a wide range of buyers. However, there will still be some challenges buyers and sellers will face. Potential buyers remain watchful of interest rates and their impact on affordability, while sellers navigate pricing strategies in a market that, while cooling, remains competitive.

The prediction for the spring selling season in Northwest Arkansas is one of balanced growth. With pending sales showing an upward trend and closed sales maintaining strength, the market is expected to be active. Yet, the pace of this activity may be tempered by broader economic factors, including interest rate movements and inflationary pressures. For sellers, the market presents an opportunity to capitalize on the sustained demand, particularly for properties that are priced competitively and marketed effectively. For buyers, it offers a more diverse inventory than during the “Covid Years,” but they should remain mindful of financial planning in a shifting interest rate environment.

 

 

 

 

 

 

 

 

Sources: NABOR

 

Disclaimer: The predictions and opinions expressed in this article are provided for informational purposes only and reflect the views of the author(s) alone. They are not intended to serve as financial, investment, or any form of advice. NWALook does not guarantee the accuracy, completeness, or timeliness of the information contained within this article and is not responsible for any errors or omissions, or for results obtained from the use of this information.