New data from the Federal Housing Finance Agency show Arkansas house prices rising over the second half of 2011. The statewide average “All-Transactions Index” increased 0.3% in the fourth quarter, following a revised 0.8% gain in the third quarter. Comparable data for the U.S. showed a similar rebound in the second half, up 0.4% in the fourth quarter following a 1.0% increase in the third quarter. Arkansas home prices are still down 0.7% from the end of 2010, but evidence is accumulating that the trend of declining prices has abated.
Of course, house prices in different areas of the state do not move in unison. Fourth quarter changes in the FHFA indexes were mixed among the state’s metropolitan areas.
- In the two metropolitan areas where prices have fallen the most over the past five years — Fayetteville-Springdale-Rogers and Memphis — fourth quarter data showed slight declines, but not enough to offset the increases of the previous quarter.
- Prices in Texarkana also fell slightly, but the longer-term trend remains distinctly positive.
- Hot Springs has seen rather dramatic price declines since the end of the recession, but had experienced rapid price increase over the previous three years.
- In Pine Bluff, prices were up sharply in the fourth quarter, but not enough to erase price declines registered in 2010.
- Prices in Fort Smith have risen slightly in the second half of 2011, and appear to have stabilized since the beginning of 2010.
- Stability has characterized house prices in Central Arkansas. On net, prices in the Little Rock-North Little Rock-Conway metro area have changed little since 2007, when prices in other areas of the nation began to decline.
- Home prices in Jonesboro never did experience any substantial price declines. Beyond some temporary ups and downs, prices have continued to rise steadily.
Although Arkansas house prices appear to have stabilized toward the end of 2011, downward price pressures remain. In particular, ongoing foreclosure activity and other sales of “distressed” properties tend to drive average prices lower. This is more likely to be a factor in areas of the state where general economic conditions remain weak. Nevertheless, the fact that mortgage delinquency rates and foreclosure activity are lower in Arkansas than elsewhere in the nation bodes well for the outlook.