Benton County the leader as state home sales rise 7%

Home sales in Arkansas rose 7 percent in March compared with March of last year, the strongest showing since the government was enticing buyers with tax credits, the Arkansas Realtors Association said Thursday.

There were 2,159 homes sold in March in the 43 counties surveyed by the association, up from 2,017 in March 2012. The 43 counties included the largest in the state.

“There’s no question it was a good report, a strong showing for March,” said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.

Benton County saw 412 sales, the most of any county in the state and 70 more than Pulaski County. It was the first time sales in Benton County led the state since August, when Pulaski County had 14 fewer sales.

Benton County home sales have been exceptional, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.

“That reflects strong employment growth in Benton County,” Deck said. “These things go hand in glove. They both support each other.”

Benton County’s unemployment rate has dropped from 6.7 percent in January 2012 to 5.5percent in March.

Before the recession of 2008-2009, Northwest Arkansas’ population was growing by about 1,000 people a month, Deck said. Now, it has rebounded to about 800 a month, she said.

The population growth and the overall real estate market in the area are building on each other, she said. In turn, the population is increasing because of job growth, Deck said.

“Job growth is amazingly broad-based,” Deck said. “Every single industry [in Northwest Arkansas] shows growth on a year-over-year basis except for information - media.”

Nationally, home sales were down slightly in March, the same as in the three previous months, primarily because of a limited supply of homes for sale.

But the number of Americans who signed contracts in March to buy homes was at the highest level in three years,projecting likely higher sales this spring. There is typically a one- to two-month lag between when a contract is signed and a sale is completed.

“Now that the housing recovery is sustainable, it’s not about whether it’s up, it’s how fast,” said Jonathan Basile, director of U.S. economics at Credit Suisse in New York.

The last time Arkansas’ March home sales were as strong as the figures released Thursday was in March 2010, when home buyer tax credits artificially spurred sales, Pakko said.

For the first three months of the year, home sales in the state are up about 5.5 percent over the same period last year, Pakko said.

That is about the same pace Pakko expects for the rest of the year.

“It’s been a slow market the last couple of years,” he said. “But there is pent-up demand. Seeing some improvement is something I’ve been expecting for some time. Perhaps it’s finally starting to show up in the numbers. But you can’t get too carried away with one month’s observations.”

Low mortgage rates are playing a big role in increased sales.

Buyers with good credit can get a 30-year mortgage with about a 3.25 percent interest rate, said Scott McElmurry, chief operating officer at Bank of Little Rock Mortgage Corp., one of the largest mortgage lenders the Little Rock area. The mortgage rate on a 15-year loan is about 2.5 percent, McElmurry said.

Late last year, as much as 60 percent of the corporation’s business was refinances, McElmurry said. But in April, 72 percent of its loan volume was purchases, McElmurry said.

“There was a huge wave in refinancing,” McElmurry said. “The fear in our business is that there’s a finite number of refinancing and as those slowed, you worry that purchases would not come in to fill the void.”

That hasn’t been the case, he said.

“We’ve been very encouraged by the signs in the market,” McElmurry said. “News coverage of the housing market had been gloom and doom, but we’re starting to see people report good news about the market. That helps confidence, even locally.”