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
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
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.
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
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
The Arkansas Realtors® Association announced this morning that home sales in January were up 8.7% from a year ago. January is typically the slowest sales month of the year, usually accounting for less than 6% of the annual total sales. Nevertheless, it is encouraging that the new year started out with a solid increase. Home sales in 2013 overall were up 12.7% compared to 2012, and the new data suggest that the strong growth is continuing into 2014.
Source: Arkansas Realtors® Association
Among the 10 counties with the highest sales totals, only two showed decreases compared to last year – Faulkner (-30.9%) and Washington (-8.9). In both of those counties, however, unusually strong sales in January 2013 biased the year-over-year comparison. If we compare sales in January 2014 to January 2012, all 10 counties showed significant increases.
Data from the Federal Housing Finance Agency shows that home prices in Arkansas rose modestly during 2013. From the fourth quarter of 2012 through the fourth quarter of 2013, the FHFA Expanded Data Index shows an appreciation rate of 0.2% (seasonally adjusted). The comparable rate of appreciation for the entire nation was 7.8%. All of the gain in Arkansas home prices was attributable to an increase in the first quarter of the year (+1.3%). Prices declined 0.9% percent in the fourth quarter, following modest declines in the second and third quarters.
Source: Federal Housing Finance Agency
The relatively slow rate of appreciation in Arkansas is not surprising. During the house price collapse of 2007-2011, prices in Arkansas did not fall nearly as far or as fast as the national average — hence, we are experiencing a smaller bounce-back.
The state-wide average performance of house prices gives a general view of residential real estate prices in Arkansas, but it also masks some differences across regions. As shown in the table and chart below, house price performance has varied considerably among the state’s metropolitan areas. The Fayetteville metro area saw the largest increase in house prices over the year (and over the most recent 2-year period) as its market recovered from the steepest price decline in the state during the 2007-11 decline. House prices in Texarkana were down slightly for the year, but that change represents only a modest setback in an otherwise increasing trend. Fort Smith and Hot Springs saw the largest 1-year declines, and prices in both of those metro areas are down over the most recent 5-year span. Nevertheless their cumulative declines since the beginning of 2007 are smaller than either Fayetteville or Memphis. (In fact, from 2007:Q1 through 2013:Q4, house prices in Fort Smith are down only 0.1%.) House prices in Memphis declined by over 12% during the 2007-11 downturn, and have yet to show any significant improvement.
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
Recently released statistics on home prices from CoreLogic®, a data and analytics company, corroborate some of the trends seen in the FHFA data. For example, the CoreLogic figures show a much slower rate of appreciation in Arkansas than for the national average. In fact, the full-sample CoreLogic numbers show a decline in Arkansas home prices during 2013. After netting out distressed sales*, however, home prices were up 3.2% from December 2012 through December 2013. The CoreLogic statistics also show relative weakness in Fort Smith and Hot Springs — as do the FHFA data. Net of distressed sales, however, prices in Fort Smith were rising faster than the statewide average. Increasing prices in Texarkana confirm that the short-term weakness suggested by the FHFA data is likely a data anomaly, and not a sign of a trend reversal.
Source: CoreLogic®
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* Distressed sales include properties that have been through foreclosure and those that are exchanged in “short-sales” (in lieu of foreclosure).
Arkansas home sales ended the year on a strong note, with December sales up 17.6% from the previous year. The year-end data from the Arkansas Realtors® Association confirmed that the slight dip recorded in November was an aberration — likely associated with the fact that the Thanksgiving holiday fell at the end of the month. For November and December combined, sales were up 6.8% from the previous year. The total for December was the highest recorded for that month since 2006.
Source: Arkansas Realtors® Association
Annual totals from the Realtors’ data showed that sales were up 12.7% for the year. In fact, this figure probably understates the true growth rate. It is not uncommon for late-reported sales to result in upward revisions to the total figures, so the numbers for November and December are likely to be even higher when all the data are in. As shown in the figure below, seasonally-adjusted sales showed a significant surge in 2013, representing a long-awaited recovery from the lackluster pace of 2011 and 2012.
Source: Arkansas Realtors® Association; seasonally adjusted by the Institute for Economic Advancement
Some of the rapid growth in home sales during 2013 was associated with demand overhang from the previous two years. As a result, sales growth in 2014 is likely to be slightly lower. Nevertheless, statewide home sales are still well below their pre-recession pace, so there is plenty of room for expansion. In addition, historically low home mortgage rates should continue to foster a favorable environment for prospective home buyers. The Arkansas Economist’s forecast for home sales in 2014 (from the November Forecast Conference) is for an increase of 7.2% compared to 2013.
The Arkansas Realtors® Association announced this morning that home sales in November 2013 were down 2.8% from the previous year. There are at least two reasons that this report should not detract from the overwhelmingly upbeat year that 2013 represented for Arkansas home sales. First, November is typically one of the lower sales months of the year. As shown in the not-seasonally adjusted data below, most of the sales in any given year are concentrated in the summer months, with November through February being relatively slow (the exception being November 2009, when the Federal home-buyer’s tax credit boosted sales late in the year). With such a strong summer season in 2013, a seasonal slowdown toward the end of the year will have little effect on annual totals.
Source: Arkansas Realtors® Association
The second reason to remain upbeat about the November 2013 sales report is the fact that November 2012 was a relatively strong sales month. The rising trend in home sales that became evident in mid-2013 actually began in late 2012, with November being the strongest month of 2012 in seasonally-adjusted terms. As illustrated in the seasonally-adjusted graph below, the November 2013 report does represent a drop-off from the rapid sales pace earlier in the year, but it remains above the lackluster trend that we saw from late 2010 through mid-2012.
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
This morning’s report showed that year-to-date sales remained 11.8% higher than in 2012. With only one month’s data remaining to be tabulated, it is clear that home sales in 2013 will represent a double-digit rate of increase from the previous two years.
The residential real estate market is experiencing its typical autumn slowdown, but the notable recovery of home sales in 2013 continues. New data from the Arkansas Realtors® Association reported another strong month, with October home sales up 13.9% the previous year. For the year to date, sales are up 12.3% from the 2012 pace.
Source: Arkansas Realtors® Association
As shown in the following chart, September and October have not been as phenomenally strong as the August sales total, even after seasonal adjustment. Nevertheless, recent monthly totals are well above the plateau that characterized home sales in 2011 and 2012.
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
At the Arkansas Economic Forecast Conference, we predicted that 2013 sales would end the year 13.8% higher than 2012. This remains a likely outcome. Even if sales in the last two months of the year dropped to 2011-2012 levels, this year would still show cumulative double-digit growth.
The Arkansas Realtors® Association reported another strong month of home sales: Total sales in September were up 18.4% compared to a year earlier. As is typical for September, sales volume was down from the peak summer months, but this was the highest total for September since 2009 when we were approaching the deadline for the first home-buyers’ tax credit. Not counting 2009, this was the best September sales month since 2006.
Source: Arkansas Realtors® Association
With year-over-year growth rates exceeding 18% in each of the last three months, the third quarter represented a significant break-through in the housing market recovery. As shown in the chart below, quarterly seasonally adjusted sales have shown a clear upward trend since throughout 2013, showing a particularly large increase in the third quarter.
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
Home sales represent one of the sectors that has performed atypically during the current recovery. The housing crash was an important precipitating event of the 2008-09 recession, and housing (particularly home construction) has not played its usual role as a driving force of economic recovery. The long-awaited pick-up in home sales this year is therefore a positive sign of an improving outlook for the Arkansas economy in general.
The August report from the Arkansas Realtors® Association (ARA) confirms that residential real estate markets in Arkansas are finally recovering from the recession/housing-crash. And the recovery is substantial: Sales for August were up 24% compared to August of last year. Cumulative year-to-date figures show sales rising 12.7% from 2012. As shown in the chart below, the August sales total of 2,818 was the highest single monthly total since the onset of the recession. The last time sales exceeded 2,800 in a single month was August 2007.
Source: Arkansas Realtors® Association
The August sales figures represent the final month of the typical June-July-August peak period for home sales. As is evident from the not-seasonally adjusted data, sales typically taper-off during the remaining months of the year. But even at the slower expected pace for the remainder of the year, 2013 sales are likely to approach 26,000 — the highest annual sales volume since 2007. For the year as a whole, a growth rate approaching 10% would not be surprising.
Seasonally adjusted data–shown below–reveal that the pace of home sales has been accelerating over the past few months. Even with the rising trend, the August sales figure represents a clear break-out.
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
Data for individual counties shows that strong sales growth is a state-wide phenomenon. Northwest Arkansas continues to be the strongest region in the state. Combined sales for Benton and Washington Counties are up 21.9% year-to-date. Among the eight counties with the highest sales volume, Pulaski County is the only one showing less than double-digit growth. Nevertheless, the combined growth rate for the Central Arkansas counties of Pulaski, Saline, and Faulkner is 12.0%.
The latest data from the Arkansas Realtors® Association (ARA) confirms that the long-awaited recovery in home sales is underway. Earlier this week, the ARA reported that sales of new and existing homes in July were up 19.1% from July of 2012. As shown in the chart below, this year-over-year comparison overstates the trend rate of growth — but not by much. Among the peak summer months of May, June, and July, last year’s July sales were relatively weak while this year’s sales show a July peak. Nevertheless, the year-over-year increase for a three-month average was 10.8%. For the year to date, the ARA data show a 10.7% increase.
Source: Arkansas Realtors® Association
Seasonally adjusted data, shown in the next chart, clearly illustrate the rising trend. During 2011 and 2012, average monthly sales seemed constrained to less than 2,000 per month. The seasonally-adjusted data show that the symbolic 2000/month pace has been exceeded every month this year — with the trend accelerating into the busy summer months.
Source: Arkansas Realtors® Association; Seasonally adjusted by the Institute for Economic Advancement
Data for individual counties shows that sales increases are not limited to any one metropolitan area, but are widespread. Among the 8 largest counties (by sales volume), all except Pulaski have shown double-digit growth rates in 2013 (year-to-date figures). For the central Arkansas counties of Faulkner, Pulaski and Saline combined, the year-over-year increase has been 11.3%.
Source: Arkansas Realtors® Association
Typical seasonal patterns suggest that sales will taper-off over the rest of the year. But given the strong summer sales pace, 2013 total sales will significantly exceed the lackluster figures from 2011 and 2012.
