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Arkansas Home Sales – 2014

The final home sales report for 2014 from the Arkansas Realtors® Association showed December home sales at 2,107, up by 6.8% from December 2013. For the year as a whole, sales were 28,453, up 4.5% from the previous year.  As shown in the figure below, December is typically one of the slower months of the year for home sales so the monthly total contributes less to the annual total than do the summer months.  Nevertheless, the data for December 2014 show a slight uptick from the previous month.

Source:  Arkansas Realtors® Association
Source: Arkansas Realtors® Association

After smoothing out recurring seasonal fluctuations, however, the seasonally-adjusted data in the next figure show that December was actually a bit weaker than the trend that prevailed during 2014.  That is, the uptick in the raw data was smaller than would be expected for a typical December given the previous trend.  Overall though, the one-month downtick in the seasonally-adjusted series is not unusual and does not necessarily indicate any sign of a sustained slowdown.

Source:  Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

In fact, month-to-month fluctuations in the home sales data are common.  The home sales figures are based on closing dates, and there can be considerable variability in the accounting — particularly when weekends fall near the end or beginning of the month.  Moreover, the data are often revised when home sales are entered into the MLS database after the housing report has been issued.  So it is useful to look at the data after smoothing out seasonal fluctuations AND month-to-month variability.  The quarterly figure below makes both adjustments.  When considering the fourth quarter of 2014 as a whole, home sales continued to follow an increasing trend.

Source:  Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Arkansas Home Sales

This morning, the Arkansas Realtors® Association (ARA) announced that home sales in November were up 10.4% from the previous year.  As shown in the figure below, November is typically one of the slower months of the year for home sales.  At just over 2,000 units, however, sales in November 2014 were the highest for the month since November 2009 — the month in which the first Federal home-buyers’ tax credit expired.  The ARA total  for cumulative sales for the first 11 months of 2014 were 26,330, approximately 4.7% higher than same period a year earlier.

Source:  Arkansas Realtors® Association
Source: Arkansas Realtors® Association

To get a better sense of the trend in home sales, the figure below adjusts the home sales data for recurring seasonal patterns.  After seasonal adjustment, it is clear that the latest monthly home sales report extends a rising trend .  After the expiration of the second home-buyers’ tax credit in April 2010, Arkansas home sales were stagnant at a seasonally-adjusted pace of less than 2,000 homes per month.  Since mid-2012, we have seen steady improvement.  With only one month of the year yet to be reported, it is clear that 2014 will be the strongest year for home sales since before the recession.

Source:  Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Arkansas House Prices – 2014:Q3

The latest update on house prices from the Federal Housing Finance Agency came out this morning.  The most comprehensive of the FHFA indexes, the “Expanded-Data Indexes” show Arkansas house prices up 1.3% in the third quarter, compared to a 1.5% increase nationwide (seasonally adjusted).  Over the past four quarters, Arkansas house prices were up 3.4%, while U.S. prices rose by 6.0%.

Source:  Federal Housing Finance Agency
Source: Federal Housing Finance Agency

Readings on house prices in Arkansas metro areas were mixed.   From the second quarter to the third quarter, prices in Fayetteville, Hot Springs and Pine Bluff all increased sharply.  However, prices were down in the state’s other metro areas.  Over the past year, Fayetteville, Hot Springs and Memphis have shown the largest cumulative gains.

Source:  Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement
Source: Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement.

The figure below displays a slightly longer-run view.  Relative to the nationwide house-price peak at the beginning of 2007, prices are higher or unchanged in most of the state’s metro areas.  The chart shows that the three metro areas that have shown the most rapid appreciation over the past year or two are the same areas that exhibited the largest declines during and after the recession.  For example, prices in Northwest Arkansas declined by nearly 20% from the beginning of 2007 until mid-2011, but have since recovered to the point of being only 9%  below the 2007 peak.

Source:  Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement.
Source: Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement.

Arkansas Home Sales – August 2014

The Arkansas Realtors® Association announced this morning that home sales in August were down 3.4% from a year earlier.  This was the first year-over-year decline since last November, but that shouldn’t come as a surprise.  The summer months of June, July, and August are typically the peak months of the year, but the peak can come in either July or August, depending on the number of closings that take place before or after Aug 1.  In 2013, the peak month was August, whereas this year the highest-sales month turned out to be July.  Comparing this year’s July/August total with last year’s, we see an increase of 3.4%.  Year-to-date, home sales are up 5.1% over last year.

ARA_0814_NSA

After seasonal adjustment, it is clear that while the August sales figure represents a slight down-tick from the previous month, it provides little evidence of any change in the upward trend of home sales over the past two years.

Source:  Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Arkansas Home Sales – July 2014

We received another strong sales report from the Arkansas Realtors® Association (ARA) this morning.  Last week, the ARA revealed a year-over-year sales increase of 10.3% in June.  In July, sales were up 10.8% from the previous year.  Two back-to-back reports of double-digit increases — coming during the peak sales season of the year — represent a clear indication that home sales are on the upswing.  As shown in the chart of not-seasonally adjusted data below, the July 2014 sales total was not only well-above the level of a year ago, but it also surpassed last year’s peak sales month (August).  As a matter of fact, the July sales figure of 2,875 was the highest single-month total since 2007.

Source:  Arkansas Realtors® Association
Source: Arkansas Realtors® Association

The peak sales months of the year are typically June, July and August.  Although their relative ranking can differ from year-to-year, sales during those three months usually account for about 30% of the annual total.  Applying standard seasonal-adjustment methods to the data, the upward trend is apparent:

Source:  Arkansas Realtors® Association; Seasonal adjustment by the Institute for Economic Advancement
Source: Arkansas Realtors® Association; Seasonal adjustment by the Institute for Economic Advancement

Because last year’s peak sales month came in August, it is quite possible that the next report from ARA will not appear quite so strong.  But it has already been a good summer for home sales.

Arkansas House Prices – 2014:Q2

New data from the Federal Housing Finance Agency indicate that house prices in Arkansas increased modestly in the second quarter.  According to the FHFA “Expanded-Data Indexes,” prices of Arkansas homes increased 0.2% from the previous quarter, and were up 1.6% from a year ago.  Prices in Arkansas have been increasing at a significantly slower pace than the nationwide average.  For the U.S., house prices rose 1.3% in the second quarter, and were 6.2% above the levels of 2013:Q2.  Generally speaking, the areas of the country that experienced the largest house-price declines from 2007 through 2011 are the areas where we are seeing the largest price increases today.  On average, house prices did not decline dramatically during the market decline, and so recent price increases have been more muted.

Source:  Federal Housing Finance Agency
Source: Federal Housing Finance Agency

The expanded data indexes are not available for metro areas, but the FHFA does publish “All-Transactions Indexes,” which included data from home sales and refinancing appraisals (but without additional information from county property recorders’ offices).  As shown in the table below, prices have been increasing more slowly than the national average in all of Arkansas’ metro areas.  Compared to a 5.7% year-over-year increase for the U.S., prices have increased only 1.6% statewide.  The largest increases were in Memphis (3.7%) and Fayetteville (2.7%), each of which experienced above-average price declines during the 2007-11 period.  House prices have declined over the past year in Pine Bluff and Texarkana, and have risen only slightly in Hot Springs and Jonesboro.

Source: Federal Housing Finance Agency; Seasonal Adjustment by the Institute for Economic Advancement
Source: Federal Housing Finance Agency; Seasonal Adjustment by the Institute for Economic Advancement

Additional data on metro-area house prices is available from CoreLogic®, a data and analytics company.  In the past 12 months (through June), the CoreLogic house price data confirms home-price weakness in Arkansas.  The statistics from CoreLogic also present the influence of distressed sales (foreclosures and short sales) on home prices.   The FHFA data are based on conforming loans, so do not included distressed sales.  In general, the inclusion of distressed sales continues to put downward pressure on home prices.  An exception is Texarkana, where price declines have been more pronounced in the sample that excludes distressed sales.  One possible interpretation of this pattern is that distressed sales where having an even larger depressing effect on market prices a year ago than they do now.

Source:  CoreLogic®
Source: CoreLogic®

Arkansas Home Sales – June 2014

New data from the Arkansas Realtors® Association (ARA) show continued strength in home sales.  New and existing home sales were up 10.4% compared to June of 2013.  The sales total of 2,708 was the highest total for the month of June since 2007.   For the first half of the year, cumulative sales were up 6.3% from the previous year.

Source:  Arkansas Realtors® Association
Source: Arkansas Realtors® Association

The steadily improving trend in home sales can be seen more clearly when the data are aggregated by calendar-quarter and seasonally adjusted.  As illustrated in the figure below, sales in the second quarter of 2014 were up by more than 3% from the previous quarter, and were nearly as high as the peaks in late 2009 and early 2010 that were associated with Federal home-buyer tax credits.

Source:  Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement

Arkansas Home Sales – April 2014

New data from the Arkansas Realtors® Association shows an increase in Arkansas home sales in April, up 8.2% from the previous year. This year’s increase builds on strong momentum from last year as well:  Comparing April 2014 to April 2012, sales have risen by nearly 25%.  For the first four months of the year, cumulative sales are up 10.2% from 2013 and up 20.4% from 2012.

Source:  Arkansas Realtors® Association
Source: Arkansas Realtors® Association

Among the ten largest counties reported, the strongest year-over-year cumulative sales increases are in Sebastian County (+23.3%) and Benton County (+17.1).   Three counties have seen slight sales declines so far in 2014 — Craighead, Faulkner and Lonoke.   However, when we compare 2014 cumulative sales to two years ago, gains are more widespread.  Eight of the top ten counties have experienced double-digit growth over the past two years, with Benton and Sebastian Counties showing increases of over 36%.

Source:  Arkansas Realtors® Association
Source: Arkansas Realtors® Association

The strong seasonality of home sales implies that the summer months are crucial for annual sales totals.  Upcoming reports for May, June, and July will be important for assessing ongoing momentum in Arkansas’ residential real estate markets.

Arkansas House Prices – 2014:Q1

New data from the Federal Housing Finance Agency shows Arkansas house prices rising, albeit at a slower trend than the rest of the nation.  The most comprehensive of the FHFA’s house price indexes — the Expanded-Data Index — shows that Arkansas house prices rose 1.6% in the first quarter of 2014, slightly higher than the 1.4% pace for the U.S.  Over the past four quarters, however, Arkansas prices have risen a total of only 0.9%, compared to a nationwide rate of 7.0%.  Since the trough in house prices in 2011:Q2, prices in Arkansas have risen by 10%, while the average U.S. increase was 15.5%.

Source:  Federal Housing Finance Agency
Source: Federal Housing Finance Agency

The slower rate of appreciation in Arkansas house prices mirrors a slower rate of depreciation during the house-price collapse of 2007-11.   From 2007:Q1 through 2011:Q2, house prices in Arkansas declined 14%, while average prices for the U.S. declined by over 25%.  In markets where price declines are the largest, the rate of recent appreciation has been the most rapid.  For example, prices in Arizona declined by 46% from 2007 to 2011, and have recovered by 31% since.

The same general pattern is true for metropolitan areas within Arkansas.  The Fayetteville-Springdale-Rogers metropolitan area suffered the largest price declines in the state, dropping by nearly 20% during the period of depreciation (FHFA All-Transactions index).  Since 2011:Q2 prices in Northwest Arkansas are up 8.1%.  Meanwhile, prices in the Little Rock metro area are up only 3.3% from trough, after a net decline of only 1.2% during the nationwide house price decline.

Source: Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement
Source: Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement

House prices in Arkansas’ other metro areas have generally changed little over the past several years.  Prices in Pine Bluff, Fort Smith, Jonesboro and Hot Springs continued to appreciate after the nationwide peak in early 2007, but only Texarkana and Jonesboro have seen positive appreciation over the most recent 5-year period.  More recently, prices have been weakening in Jonesboro (down 2.2% over the past year) and in Hot Springs (down 3.5%).

Source:  Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement.
Source: Federal Housing Finance Agency; seasonally adjusted by the Institute for Economic Advancement.

 

Home Sales – March 2014

New home sales data that came out last week showed that the number of closings in March 2014 was unchanged from March 2013.  Although year-over-year growth was zero for the month, momentum is still positive.  A year ago, the March report gave the first indication that 2013 would be a year of strong sales growth, so it is not necessarily disappointing that March of this year had the same sales pace.  Moreover, wintery weather in January and February is likely to have contributed to a somewhat lower volume of closings in March than would otherwise be the case.  Even with the cold weather, cumulative sales for the first three months of the year were up nearly 6% over the previous year.

Source:  Arkansas Realtors® Association
Source: Arkansas Realtors® Association

The rising trend in home sales is more apparent in the following figure, which shows quarterly averages of  seasonally-adjusted data.  With the recurring seasonal patterns and monthly volatility removed, it is clear that first-quarter sales represent ongoing recovery of the residential real estate market.

Source:  Arkansas Realtors® Association, seasonally adjusted by the Institute for Economic Advancement
Source: Arkansas Realtors® Association, seasonally adjusted by the Institute for Economic Advancement