When the secretary of Housing and Urban Development visits your community, accompanied by a member of Congress and the governor, you know housing is a major issue for your region.
This happened in late April when HUD Director Scott Turner spent the day in Benton and Washington counties with U.S. Rep. Steve Womack, R-Rogers, and Gov. Sarah Sanders.
As a mortgage lender with over 20 years of experience in Northwest Arkansas, I was particularly interested in what was said about housing development. From reading the news coverage of the visit, I know two points are very clear: our continuing need for more housing overall and specifically, the need for more affordable housing.
We know from the most recent Arvest Skyline Report that much of the new housing will be apartment units. There were more than 8,000 new apartment units under construction at the end of 2024, according to the Skyline Report on multifamily real estate.
But the Skyline Report on residential real estate also tells an interesting story of the growing importance of new single-family home construction in providing needed housing for Northwest Arkansas residents:
• From 2010-2018, new construction represented 18.9% of total home sales.
• From 2019-2022, new construction increased to 27.8% of total sales.
• In the past two years, new homes account for 39.1% of all home sales.
Nearly four in 10 homes sold in Northwest Arkansas are now newly constructed. This trend highlights the work of residential construction companies in the region and the types of homes they are building and selling.
I’ve seen a great deal of change when it comes to residential construction. Before the 2006-2009 real estate crisis, most homebuilders in the region were relatively small and almost exclusively local. If you’ve been in Northwest Arkansas for as long as I have, you likely remember the glut of newly constructed homes that flooded the market without being sold in the mid-2000s. This peaked in the third quarter of 2006 with 2,956 complete but unoccupied homes.
Fast forward to today, and there are fewer companies building homes in the region. Fortunately, we now have a good balance of local, regional and national builders who each have their own focus on different parts of the residential market, from high-end luxury homes to custom or semi-custom homes and large-scale, pre-designed home communities.
First-time homebuyers are a focus of my work as a mortgage lender. New construction homes are oftentimes very attractive to first-time buyers, who are usually moving from an apartment or rental home in search of an affordable home. In our market, that would generally be a home in the $200,000 to $300,000 range. For first-time buyers, new homes can be more predictable from a budget standpoint because they don’t require costly repairs or improvements in the first years of ownership.
Most affordable homes are built by larger regional and national builders. Because they can buy materials at a larger scale, not only can they offer value for the potential buyer in terms of the cost of a new home, but many of these builders also offer various incentives, such as paying closing costs.
Mortgage lenders like Arvest can also make financing more affordable for first-time homebuyers. For example, we recently participated with other regional lenders in a special first-time homebuyer incentive program through the Federal Home Loan Bank of Dallas.
As businesses in Northwest Arkansas continue to grow and add new employees, we will continue to see new residents move into the region and need a place to call home. Residential home builders have become more vital than ever to the region’s overall housing picture and economic growth.
Editor’s note: José Hernandez is a mortgage lender for Arvest Bank – Springdale region. The opinions expressed are those of the author.