Arkansas home sales slide 21%

LITTLE ROCK — Arkansas home sales fell 21 percent in September compared with September last year, the Arkansas Realtors Association said Thursday.

It was the third consecutive month that home sales dropped. Sales were down 15 percent in August and 32 percent in July when compared with the year-ago months.

For the four months before that, Arkansas home sales were up - exceeding 20 percent increases in March and April - primarily because of boosts from the federal tax credits for homebuyers. Buyers had through April 30 to sign contracts on homes but had until Sept. 30 to close the purchases.

The average sales price in September was $145,670, up 3.7 percent from a year earlier.

September’s decline in sales was not surprising, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.

“It’s not surprising to see pretty steep declines on a year-over-year basis when you’re comparing with a time when there were tax credits available,” Deck said. “I think we explicitly moved demand forward [with tax credits], so it’s not surprising that demand is missing right now.”

Another reason for the drop is the timing for most homebuyers, said Michael Pakko, chief economist and state economic forecaster for the Institute for Economic Advancement at the University of Arkansas at Little Rock.

“There tends to be a drop off in September,” Pakko said. “One of the motivations is for people to get moved into their new house by the beginning of the school year. Home sales that close in September don’t meet that deadline.”

Arkansas’ slippage in September was almost identical to the report this week from the National Association of Realtors on sales in September of previously owned, which were down 19 percent compared with September last year. Arkansas’ home sales figure includes previously owned and new homes.

“The overall pattern is very much the same,” Pakko said.

Home sales dropped in all of the major Arkansas markets. Faulkner County sales sank by 45 percent, Pulaski County was off 27 percent, Saline County was down 26 percent, Washington County dropped 20 percent and Benton County fell 13 percent.

Even historically low mortgage rates don’t seem to be able to spur sales.

A 30-year fixed-rate mortgage was available to qualified buyers at 3.75 percent in central Arkansas, said Jim Carroll of Carroll Mortgage.A 15-year fixed-rate mortgage was available for 3.5 percent, Carroll said.

Carroll said his firm has been busy with mortgage refinancing but there hasn’t been much new sales activity.

Deck does not expect home sales to strengthen until spring.

“I still believe that we’re going to be working our way through the aftereffects of [the tax credits] until we get into the spring buying season, which is more traditionally when people move and there are a lot of houses on the market,” Deck said.

Pakko agreed.

Home sales in Arkansas are almost even through September this year compared with the first nine months of last year, with about 18,600 sales this year compared with about 18,750 last year.

But October, November and December were strong months last year, with the tax credits in effect. There were 6,300 homes sold in the last three months of 2009, about 30 percent more than in the last quarter of 2008.

“We’re entering the slow part of the season now, so it’s unlikely that home sales will reach the same rate of the subsidized case last year,” Pakko said. “By next summer, [Arkansas’ housing market] should be standing on its own two feet.”