I have to apologize to everyone for it being June 17th and I am just now getting the May report done. A lot has been going on in the market: interest rates have come up some, foreclosure sales are down (a good thing) home prices are up, pending sales are up, and general market sentiment is much higher than in the last few months. Here is the Northwest Arkansas Home Prices and Market Report for May of 2009. I do hope you find it interesting. Remember that you can find all of my monthly market reports in Market Conditions.
Northwest Arkansas Home Prices and Housing Market Report
We’ve got some pretty astounding numbers this month. The average Sales Price of a home that sold in May vs. a home that sold in April of this year went up over $24,000 to $168,181. An increase of just over 17% in one month. I’m not saying the average home in Northwest Arkansas’ value increased 17% in the past thirty days. But what I do think is happening is just about as good.
Foreclosure sales have dropped off significantly to be replaced with traditional home sales. As we know, foreclosures artificially lower average sales price of normal properties so I think we can safely say that more ‘normal’ homes are selling.
To further my argument for more normal sales, the price per square foot sold has gone from a low of just over $79 per foot in February to this month’s high of $90.48 per square foot.
Average Home Prices for Sold Properties in Northwest Arkansas
While we had a bit of a hiccup last month, this month’s average sales price of over $168,000 brings us back to fall 2008 levels. I don’t know what you see but I see recovery.
May numbers by City
Below are individual city numbers. I will remind everyone that these numbers don’t add up to the complete NWA numbers because smaller cities and rural areas are not taken into account here. If you want specific numbers on other cities or areas you can contact me, call your Realtor, or do it yourself (if you are a Realtor).
With the exception of Bentonville… each town had a statistically significant increase in home sales over the past month. 50% more homes sold in Fayetteville in May than in April! If that’s not significant, I don’t know what is.
Northwest Arkansas Pendings, Solds, and Expireds by Month for 2009
I love to see pending sales trend up like this. It means many more closing in the next 30-60 days. You can also see the number of expired dropping significantly. To me, this means homeowners and buyers are coming to a meeting of the minds when it comes to value and the ultimate sales price.
Current Inventories in each Northwest Arkansas City by Month
Besides some building going on in Fayetteville that is skewing their numbers a little…currently listed property inventories are falling in each sub-market of Northwest Arkansas. Less supply equates to higher prices. As Ron Burgundy would say, “It’s science.”
Average Days on Market by City
This one is kind of a messy graph. But it does help you see how each city is faring and how long properties typically stay on the market. The average for all of NWA went up to 168 days this month. Hopefully, with the drop in supply and increase in demand… we’ll see these numbers drop over the next few months.
Absorption Rates by Price Range
For a numbers guy like myself… this is the most interesting graph of all. As absorption rates continue to fall each month we’ll see prices come into balance. Supply and demand will stabilize and a healthy market will resume here in Northwest Arkansas. Pay special attention to the blue line as that is where the majority of properties in Northwest Arkansas fall. If the absorption rate continues to fall to 7 or lower… *gasp* we’ll be looking at seller’s marketing again.
Before we go… a note on Absorption Rates
Many pure staticians would say I don’t figure or quote absorption rates correctly. Well, I do what makes sense. I also ‘levelize’ the figures by average the past 3 months worth of sales in the data. I find it is a truer representation of the trend. And the trend, ladies and gentlemen, is what we want to know anyway.
Take this quote from WikiAnswers:
The number shows the rate at which the inventory of homes for sale are being sold. A declining figure indicates [to] people the inventory is decreasing as more homes are being sold than are coming onto the market. A rising absorption rate implies that there are more homes coming onto the market than there are buyers willing to buy at the market prices.
The absorption rate lets you know how well the market is absorbing the current inventory of listings. The ultimate question the absorption rate answers is, “Is the current inventory level shrinking or growing“?
I hope that helps you see how useful a tool the absorption rate can be.
Well that’s it for this month’s market report for Northwest Arkansas. After some months of slogging through the detritus, it looks like NWA is coming through the bubble (I call it a Swell for Northwest Arkansas) better off than most of the rest of the country. If you haven’t read it yet, check out The Forbes List of Best Cities for Recession Recover over at our broker site https://exitprorealestate.com/
As always please leave your thoughts about the state of the market if you have any. If you like this market report and want to continue to read them on a regular basis (they make more sense that way) then use the form just below to subscribe by RSS or email. Thanks for reading.