Learn more about the housing market in Arkansas

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

Arkansas Real Estate Market Overview 

America’s “Natural State” is known for its gorgeous landscapes and outdoor wonders, complete with incredible hot springs and extensive forests.  

With nearly 25% of Americans working remotely, those untethered by an in-person job may be tempted to flee expensive cities for Arkansas’s outdoor offerings (and lower than average housing prices). This begs the question: what would be helpful to know about the housing market in this area prior to moving?  

The median Arkansas home price is up 9% compared to 2023, selling at an average of $256,600 according to Redfin.com. Arkansas also had some of the highest rates of incoming migration in the country in 2022, boasting a staggering 41.9% more inbound movers than outbound.  

While many different demographics may feel drawn to Arkansas, young professionals especially may see opportunity in Little Rock’s blossoming job field— the city may not have as many openings as New York or Los Angeles, but the competition for positions is not as tough, and there is less pressure to secure a high-paying salary since the cost of living is much lower. With houses across the U.S. selling at an all-time high, Arkansas housing market rates and average rent prices have been generally more affordable than other states, with the average U.S. home price being around $495,000 in 2023.  

In this article, we’ll continue to explore Arkansas housing market and real estate trends, including the metrics, insights, and forecasts you need to know if you’re considering moving to or investing in the state. 

Arkansas Housing Market Trends 

To understand the housing market in Arkansas, it’s important to keep up with trends. Let’s look at some key ones in Arkansas: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024. 

Median Home Price 

The median home price in Arkansas in April 2024 was $256,300. This number is 8.7% higher than last year, according to Redfin’s monthly housing data. 

Certain areas of Arkansas have slightly higher rates. For example, Little Rock has a median sale price of $250K. Recently, homes in that area have tended to sell for approximately the listing price.  

Number of Homes Sold in April 2024 

There were 3,251 homes sold in Arkansas in April of this year, which is up 9% from last year. However, it’s important to keep in mind that this number might be inflated compared to other months. Sales nationally tend to peak during the spring and summer months and slow considerably in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The current median days on market (DOM) in Arkansas is 40 days. This number is consistent with Arkansas’s DOM from last year, which was 41 days. Nationally, houses tend to stay on the market for 34 days, though this number varies widely based on the local market, so it can be difficult to say what time frame could be considered long or short. It’s a better practice to compare how long a listing has been on the market compared to homes in its area. For an Arkansas home, anything substantially longer than 40 days could be a red flag for buyers.  

New Supply Statistics 

Currently, the housing supply in Arkansas is rapidly increasing. This year, the amount of housing available has increased 19% for a total of 13,508 homes for sale in April 2024. In 2021, there were 4.69 new residential construction permits per 1,000 people in Arkansas. A greater housing supply means more opportunity and choice for buyers, as well as more affordable pricing.  

Property Tax Rate 

Arkansas’s average property tax rate is 0.64%, putting it at the 16th lowest rate in the United States, with the national average at around 1.11%. However, it’s important to keep in mind that tax rates vary widely based on what county you reside in and the value of your property.  

Foreclosure Rate in Q1 of 2024 

According to data from ATTOM, the first quarter of 2024 saw 1 in every 2,227 Arkansas homes in foreclosure. Foreclosure rates are an important metric when determining the overall health of a state’s housing market, and Arkansas’s rate is down 14.09% from the first quarter of 2023. This quarter makes Arkansas at almost average for the nation at #26 for foreclosure rate. 

Hottest Local Markets in Arkansas 

There are many advantageous markets in Arkansas for homeowners and investors. Let’s look at a few: 

1. Conway

Conway, AR is known as the City of Colleges, the home of Hendrix College, the University of Central Arkansas, and Central Baptist College. Rocket Homes describes the market in Conway as a seller’s market, since home prices have trended upwards and the days on market are less than the state average. In fact, from May to June 2024, homes prices in Conway have increased by 6.8%. Conway homes sell anywhere from 6-17% more than their neighboring towns, and the number of homes for sale has increased by 6.5% from April to May 2024. 

As of June 2024, Rocket Homes reports that the median sold price for homes in Conway is around $297,000, with 294 homes for sale.  

2. Cave Springs

One of Arkansas’s most competitive markets is Cave Springs, AR. Located in Fayetteville, a city in the northwest Arkansas housing market, Cave Springs was rated the #1 best place to buy a home in Arkansas by Niche.com, as well as the best place to raise a family. Nestled in the Ozark Mountains, Cave Springs has gorgeous views of winding waterways and is home to two famous caves.  

Homes in Cave Springs are currently selling for 10.3% more than they were in May 2023, going for just over $556,600. Redfin describes Cave Springs as very competitive, since homes in this area sell after only five days, two days less than this time last year. Many properties get multiple offers and will sell above list price. 

3. Lowell

Lowell, AR is another area where the housing market is extremely competitive, with some homes going pending in as little as two days. Lowell is attractive to those who are looking for a quieter life with beautiful mountain views and low crime rates. Lowell is described as having old-town charm while retaining suburban convenience. 

Lowell home prices are up 4.7% from April 2023 to April 2024, selling for an average of $355,000.  

Economic Factors Impacting the Arkansas Housing Market 

A holistic view of Arkansas’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below: 

Mortgage Rates 

Mortgage rates across America have been higher than normal the past few years, but Arkansas seems to be relatively moderate compared to other states. Arkansas, as of June 10, 2024, has a current 30-year fixed mortgage rate of 7.13%, and a 15-year fixed rate of 6.63%. To compare, today’s current national rate average is 7.72% for a 30-year and 6.91% for a 15-year mortgage.  

It’s important to remember that mortgage rates fluctuate widely, and the rates mentioned in this article could be quite different from what they become with time. Start monitoring mortgage rates as soon as you decide to buy a home and see how the housing market reacts to its changes.  

Inflation and Cost of Living 

Mortgage rates and inflation are closely linked, and the overall affordability of a home is heavily influenced by these metrics. Inflation increases the cost of living and thus the cost of your home, so when inflation rises nationally, fewer people can find a property that fits within their budget. Even in a relatively affordable state like Arkansas, home prices are increasing.  

Population Changes and Demographics 

Population demographic shifts due to migration and employment can impact the health of the housing market in any area. In Arkansas, unemployment is relatively average at 3.4% in March of 2024. Additionally, the median household income in Arkansas is around $56,000. Most Arkansas residents can find a job within the state right now, which bodes well for the future of the housing market.  

Arkansas Housing Market Forecast 

While it’s difficult to definitively say what the future of Arkansas’s housing market will be, due to the typical seasonal increase of interest during the spring and summer months, buyers can expect increasingly competitive markets until interest rates cool off. Sellers will most likely continue to have the upper hand and the market can expect an even lower DOM rate as people migrate from costly areas like Los Angeles in favor of Arkansas’s lower cost of living. 

Likelihood of Arkansas Housing Market Crash  

Housing market crashes are a scary yet inevitable part of the economy. Typically, market crashes are characterized by a sudden drop in home buying demand—this can happen for a variety of reasons, but most commonly from a recession in which many would-be homebuyers lose their jobs. A drop in demand can also occur from extremely high mortgage rates.  

In Arkansas, demand is not an issue this area currently suffers from. The exodus from cities with a heightening cost of living and lessening inventory keeps Arkansas cities stocked with new residents. According to Redfin, 16.3% of homes in Arkansas sold above list price, indicating a healthy and competitive demand for property. Mortgage rates are moderate as well, pointing towards a stable housing market for the foreseeable future.  

Forecast for The U.S. Housing Market 

Now that we’ve looked at Arkansas’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Arkansas Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

Below are just a few of the current trends for Arkansas’s rental market based on data pulled in July 2024 from Zillow:

Arkansas Rental Market Key Trends 

• Median rent: $1,375 

• Month-over-month rent change: -$20

• Year-over-year rent change: +$25 

• Available rentals: 2,949

Conclusion 

While Arkansas may not be the first state that comes to mind when thinking of booming housing markets, many potential buyers have already been clued-in to the upsides of living in this outdoorsmen’s paradise. Especially in areas with growing communities like the northwest Arkansas housing market, these places offer many homebuyers a cheaper cost of living as inflation rates skyrocket, allowing many to achieve the level of comfort they look for in a home without the outrageous price tag.