Apr 18, 2023 - Real Estate

Rents dip nationally, but vacancies remain tight in NWA

Data: Arvest Skyline Report; Chart: Axios Visuals
Data: Arvest Skyline Report; Chart: Axios Visuals

The median U.S. asking rent fell 0.4% year over year to $1,937 in March, per a Redfin analysis — the first drop since March 2020.

  • But in Northwest Arkansas, rent is 27% higher than two years ago — an average asking price of $926 at the end of 2022 — and vacancy rates remain low.

Why it matters: Rising rent prices make it harder for lower- and middle-range wage earners to afford living in NWA.

  • Regional and national experts have warned that unattainable housing could price out essential workers like teachers, service employees and firefighters.

What's happening: The average asking rent in NWA at the end of 2020 was $729. The price has increased every six months through the end of 2022, according to data from the Skyline Report.

Zoom out: National demand for rental property is falling because people appear to have reached their price limits, Axios' Emily Peck reports.

  • Rents are still 20% higher than right before the start of the pandemic, overall inflation is hurting and there's growing economic uncertainty.
  • Meanwhile, supply is rising because hundreds of thousands of newly constructed multifamily apartments came on the market in 2022 — built at a record pace — per an analysis of Census data on new residential construction.

By the numbers: Vacancy rates in NWA's four largest cities have consistently dropped despite new multifamily housing being built and leased in both Benton and Washington counties.

  • Multifamily building-permit value — a broad measure showing that more apartment space is under construction — was $333 million, down from $371 million as of June 30, 2022.
  • By comparison, multifamily building-permit value was $216 million in the second half of 2021, up from $204.5 million in the first half of 2021.

Reality check: The national numbers don't mean everyone can suddenly afford a better place to live. Rents are still historically high.

  • While they're down 9% from last year in Chicago and 11% in Austin, rents are still soaring in Raleigh, North Carolina (up 17%) and Cleveland (15%).

What we're watching: Bentonville recently created a housing affordability workgroup and has pledged to implement policies to create an environment where developers can build moderately priced housing in areas with convenient access to jobs, services and amenities.


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