Northwest Arkansas’s four biggest cities issued 23 percent more building permits in the first three months of this year compared to the same time frame in 2012, according to a compilation of city records. That’s yet another sign of an improving local economy, observers say.
The cities issued 326 building permits for single-family homes through the end of March, compared to 265 a year earlier.
By The Numbers
Building Permits
Below is the number of building permits issued for single-family homes and their total valuation the first three months of 2013 and 2012. The numbers were compiled from reports by each of the city’s planning departments.
City 2013 Permits 2013 Valuation 2012 Permits 2012 Valuation
(Dollar amounts are in millions)
Bentonville 91 $25.4 102 $22.57
Fayetteville 74 $17.04 54 $11.81
Rogers 112 $20.35 64 $13.4
Springdale 49 $12.77 45 $10.81
Total 325 $75.56 265 $58.59
Source: Staff Report
“I expect construction to be a real contributor to the positive growth in the overall economy,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas. “This is likely to be a year when we see strong building permit growth all year.”
The value of homes under construction also grew. Permit valuation was up 29 percent for the same quarter last year. Total valuation hit $75.56 million through the first three months of the year compared to $58.59 in the first quarter of 2012.
The low inventory of new homes on the market is pushing the need for construction, said Paul Bynum, owner and principal broker of MountData, an real estate marketing firm.
“New construction volume is higher, but new listings are lower,” he said.
The homes under construction will boost the inventory and give potential buyers more options, Bynum said.
There are 273 new homes listed for sale in Benton and Washington counties and 181 sales in the past three months, according to MountData. The median list price is $239,900 and the median sales price was $223,500.
Brenda Jones, executive director of the Northwest Arkansas Homebuilders Association, said it takes three to six months to build a home.
Builders are working on a mix of custom and speculative homes at various prices, she said.
“We have such a wide range of builders, it just depends on where they are building,” Jones said.
Bentonville had the highest average valuation of building permits in the past three months at $279,121. Rogers was lowest at $181,696.
Jack Hales, owner of Jack Hales Construction in Rogers, said he is building starter houses valued at $110,000 in east Rogers.
“There is more demand than I have houses,” he said. “I’m selling them before they are finished.”
The market started turning about two years ago and is steadily improving, Hales said.
Building permits were up almost 53 percent between July and December 2012 and the same months in 2011, according to the most recent residential real estate Skyline Report. The report was released by Arvest Bank and the Center for Business and Economic Research at the University of Arkansas’ Walton College of Business in February.
Benton County residential projects accounted for 641 permits in the last half of 2012; Washington County had 339.
Hales said the four big towns in the two-county area account for about a third of the area’s building permits.
Deck said building is improving, but is restrained.
“It is stronger but nothing like the craziness we had before,” she said referring to the home construction boom that peaked in 2006.
Hales, who is also president of the Northwest Arkansas Homebuilders Association and a co-owner of Hearth and Home in Lowell, said he remains cautious.
“It’s very easy to overbuild and have a surplus of new homes,” he said. “I hopes that doesn’t happen.”
Business at Hearth and Home is another sign of improving times, he said.
“We are swamped everyday to get the product out to the customers,” Hales said. “It’s still a fragile industry, but it is on the incline.”