New construction homes in Little Rock are in demand for several key aspects. New homes generally have strict quality control standards, updated styles, advanced construction methods, and often an improved energy efficiency rating when compared to older existing homes. And most Arkansas builders offer extensive home warranties for their Little Rock new homes for sale.
Have you also notices how a strong economy drives a strong housing market? The U.S. has fortunately benefited from a great economy lately, and Arkansas’s housing market has reaped the rewards. For that reason, it’s common to believe when that home building increases when home values break records. Let’s take a closer look at how today’s construction pace compares to past years.
New Construction Trends
According to housing market trends published in 2017 by the U.S. Department of Housing and Urban Development, the rate that new construction homes in Little Rock, AR are being built is significantly lower than historical numbers. And real estate is a much different market today, and it’s unclear if new construction ever returns to previous levels.
From 2017-2020, demand for new homes in Little Rock and the surrounding area was projected to be 4,325 units, and sales demand was expected to accelerate in 2019 and 2020 with population growth. Single-family homes in the $110,000 to $199,999 project the highest demand, with a median price around $175,000. According to the Arkansas Democrat Gazette, that projected increase in construction demand appears to have materialized prior to the global Coronavirus crisis.
According to numerous resources, the cost per square foot for new construction homes in Little Rock also increased significantly during the last several years, which tends to slow down the rate of development. Construction cost increases are attributable to increased demand for materials, including lumber, roofing, steel, and cement and lumber. Higher labor costs can also cause delays, especially with a shortage of residential construction workers like we’ve seen.
Where’s New Home Construction in Arkansas headed from here?
As the crisis surrounding Covid-19 heaps additional damage on the American economy, construction of new homes collapsed in March with housing starts tumbling 22.3% from the previous month. Single-family home starts were down 17.5%, and multi-family condo and apartment starts were down 32.1%.
These decreases appear more grim considering 20 million Americans lost their jobs in the last month. People without jobs usually can’t buy homes because they cant get a mortgage. That’s why growth in the housing market is so dependent on the unemployment rate and labor force participation rate. The Arkansas real estate market was churning along at record levels prior to this crisis. A strong housing rebound seems contingent on life returning to ‘normal’ from the virus. Let’s hope that happens, and things move swiftly.
More information and projections on the Little Rock-North Little Rock-Conway, Arkansas HMA can be seen in HUD’s useful reporting.