For many Arkansans, the dream of buying a first home felt both closer and farther away between 2018 and 2023. Home prices climbed sharply, peaking during the pandemic boom before cooling slightly—but not enough to offset the rising cost of borrowing. From the fast-growing suburbs around Little Rock to rural areas seeing new interest, first-time buyers faced shifting ground. Who was buying, what they could afford, and how they financed it all changed quickly, revealing a complex picture of aspiration, adaptation, and economic pressure across the state.
Arkansas Housing Market Overview (2018–2023)
In the late 2010s, Arkansas’s housing market was relatively steady with modest growth in home sales and gradual price increases. Northwest Arkansas was one of the hottest regions, with home sales growing about 1% in 2018 and 6% in 2019. Statewide, affordable prices and low interest rates made homebuying accessible for many first-timers.
Dramatic Changes During 2020–2022
When the COVID-19 pandemic hit in 2020, ultra-low mortgage rates (around 3%) and the shift to remote work set off a homebuying boom. Buyers rushed to take advantage of cheap loans and the need for more space. Arkansas, usually known for low housing costs, suddenly saw bidding wars and double-digit price jumps. Statewide home sales spiked by double digits in 2020. In Northwest Arkansas, sales jumped 12.8% in 2020 amid the frenzy.
By mid-2022, Arkansas home prices hit record highs. The median sale price statewide around mid-2022 was about $252,000, up 12.4% from the year before. For a state that had a median home value around $130,000 in 2017, this was a dramatic increase. From 2018 to 2023, Arkansas home prices rose roughly 9% per year on average, far outpacing income growth of about 5% per year. This created new affordability challenges for first-time buyers.
Cooling Off in 2022–2023
The red-hot market cooled when mortgage rates shot up in late 2022. The Federal Reserve’s fight against inflation pushed 30-year loan rates to approximately 7%, which priced out many buyers. Home sales slowed sharply. By October 2022, the number of houses sold in Arkansas was down 24.6% compared to a year earlier. In Northwest Arkansas, home sales dropped about 10–11% in 2022 and again in 2023.
Prices leveled off by late 2023, with some areas even seeing slight dips. For example, in Benton County (part of the fast-growing northwest region), the average single-family home price in the second half of 2023 was $420,144, about 0.6% lower than six months earlier. Statewide, home prices were rising only in the low single digits (~5% year-over-year) instead of the 10%+ gains seen in 2020–2022.
In summary, 2018–2021 was a period of rapid growth in Arkansas’s housing market, culminating in an affordability crunch by 2022. After mid-2022, higher interest rates cooled demand and stabilized prices. First-time buyers experienced a wild ride – from rushing to snag homes in 2020–21 to seeing more breathing room by 2023, albeit with higher borrowing costs.
Buyer Demographics: Age, Income, and Household Size
Rising Age of First-Time Buyers
The typical first-time homebuyer in the U.S. is now in their mid-30s. The National Association of Realtors (NAR) reports that in 2023 the median age of first-time buyers hit 38 years – an all-time high, up from 35 just a year earlier. Arkansas mirrors this trend, though possibly at a slightly younger age due to the state’s historically lower home prices. Most Arkansans become homeowners by their mid-30s (around age 36 on average). A generation ago, in 1980, most bought their first home by age 27.
Income Challenges
One reason for delayed homebuying is that home prices have grown much faster than incomes. Arkansas’s median household income is only about $50,000 (among the lowest in the nation). A typical family that owns a home in Arkansas has a higher income around $78,000, but that’s still modest compared to housing costs. With a $250,000 home (roughly the recent median price), even a $78,000 income can be stretched by mortgage payments, taxes, and insurance. This is why many first-time buyers have needed dual incomes or have postponed buying until they saved more.
Household Composition
Household size for first-time buyers tends to be small. Many are young couples or young families with one or two children, and some are single individuals buying on their own. Nationally, over 60% of first-time buyer households are married couples, about 20% are single women, and around 10% single men (the rest are unmarried couples). In Arkansas, which has a traditional and family-oriented demographic, first-time buyers are commonly married couples in their late 20s or 30s, often with a child on the way or young kids.
It’s worth noting that the vast majority of older Arkansans already own homes – about 78% of Arkansas householders age 55 and over are homeowners. This means most first-time buyers are drawn from the younger population (under 40). While Arkansas’s overall homeownership rate is around 66%, the rate for young adults (age 25-34) is much lower.
In short, Arkansas’s first-time buyers in 2018–2023 were mostly in their late 20s to 30s, often couples (sometimes with young kids), with moderate incomes. They are older and better-paid than first-time buyers of the past, largely because houses cost more now, requiring more time to afford that first purchase.
Types of Homes Being Purchased
Traditional Single-Family Homes Dominate
When it comes to what kind of home Arkansas first-timers buy, the clear favorite is the traditional single-family house. Arkansas is a mostly rural and suburban state without many high-rise condos or co-ops. About 87% of owner-occupied homes in Arkansas are detached single-family houses. First-time buyers overwhelmingly go for these houses – typically 2-3 bedroom homes with a yard, often called “starter homes.”
Townhomes and condos make up a tiny slice of the market in Arkansas. Only around 1% of Arkansas homeowners live in attached single-family homes (townhouses), and condos in multifamily buildings are also relatively rare outside of a few areas like Little Rock metro or college towns.
Manufactured Homes as an Affordable Option
One notable option for budget-conscious buyers in Arkansas is manufactured homes (mobile homes). These are quite common in the state. Roughly 11% of Arkansas’s owner-occupied housing units are mobile or manufactured homes. For some first-time buyers, especially in rural counties, a new manufactured home can be an affordable way to own a home on a piece of land. Manufactured homes often cost less per square foot than site-built houses.
Trade-offs in a Competitive Market
In the competitive pandemic-era market, many first-time buyers had to make trade-offs. When prices were spiking in 2020–2022, some buyers who originally wanted a brand-new house ended up purchasing an older home or even a fixer-upper. By late 2022, about 24% of listed homes in Arkansas were still selling above asking price, and the average time a home sat on the market was only around one month.
Despite these compromises, buyers clearly preferred single-family houses whenever they could afford them. Townhomes and condos were a fallback only in certain locales, and manufactured homes served as a vital affordable option, especially in rural Arkansas.
Pricing Trends and Affordability
Dramatic Price Increases
Home prices in Arkansas skyrocketed from 2018 to 2023, creating a double-edged sword for first-time buyers. In 2017, the median home value in Arkansas was about $129,900 – one of the lowest in the nation. By 2022, the median value of owner-occupied homes was in the mid-$170,000s, and by mid-2024 the median list price for homes on the market hit around $300,000.
What do these prices mean for first-time buyers? Consider a $250,000 house – at 3% interest (in 2020) vs 7% interest (in 2023), the monthly payment difference is huge. During 2020–2021, low interest rates helped first-timers: even though prices were rising, cheap loans made monthly payments manageable. However, by 2023, with higher interest rates, monthly mortgage payments on the same priced home became hundreds of dollars more, severely eroding affordability.
The Silver Lining of Relative Affordability
In Arkansas, the silver lining is that homes here are still much cheaper than the national average (the typical U.S. home value is roughly $370,000, nearly 1.5 times higher than Arkansas’s). This relative affordability attracted some out-of-state buyers and remote workers during the pandemic, who could outbid local first-timers.
By late 2023, with the market cooling, price appreciation flattened. This was a relief for first-time buyers: instead of facing 10%+ price jumps each year, they saw prices stabilizing. In some Arkansas cities, prices even dipped slightly, giving buyers more negotiating power. Inventory also increased, giving buyers more choice. In early 2024, Arkansas had about 9,100 homes listed for sale (May 2024), up 33% from a year earlier.
Affordability Challenges
Despite being “cheaper” than most places, Arkansas wasn’t immune to the affordability crunch. Home price growth (around 9% per year during 2018–2023) far outstripped income growth (~5% per year). Many first-time buyers needed to spend a higher multiple of their annual income on a house than in the past.
Down payments became a bigger hurdle as prices rose. A 5% down payment on a $250,000 home is $12,500, compared to $7,500 on a $150,000 home a few years prior. The median down payment for first-time buyers nationally is around 6-7% in recent years (and 9% in 2023 according to NAR). In Arkansas, an analysis found the median down payment was only about $9,000 in 2024 (roughly 4% of the purchase price), showing that first-timers are often scraping together minimal down payments.
Regional Differences Across Arkansas
Northwest Arkansas: Exceptional Growth
Northwest Arkansas (NWA), including Bentonville, Rogers, Springdale, and Fayetteville, was the superstar of Arkansas’s housing market. This region experienced explosive growth in 2018–2023. With companies like Walmart, Tyson Foods, J.B. Hunt, and a growing university and tech presence, the region attracted new residents and drove up housing demand.
For first-time buyers in NWA, this was a tough environment. Prices in Benton and Washington counties rose by over 50% from 2016 to 2021 alone. By 2023, an entry-level home in the Fayetteville area could easily cost $300k or more. Many first-timers relied on special programs or family help for down payments, or looked to smaller towns on the outskirts for something affordable.
Central Arkansas: Moderate and Steady
Central Arkansas, anchored by Little Rock and its suburbs, had more moderate growth. From 2018–2023, home prices in Central Arkansas did rise: the median sale price in the Little Rock area reached the mid-$200s by 2023, up from the low-$200s in 2018. That’s steady appreciation, but not extreme.
For first-time buyers around Little Rock, there were still many homes in the $150k-$250k range, especially in older neighborhoods or suburbs further out. During the pandemic boom, inventory did get tight in Central Arkansas too – good homes under $300k often received multiple offers. But by late 2022, higher rates cooled things off.
Eastern Arkansas (Delta): Stagnant and Affordable
In stark contrast to the boom regions, the Eastern Arkansas Delta saw little to no growth. Many Delta counties are losing population, and housing demand was weak, with home prices staying extremely low. It’s not uncommon for median home values in these counties to be under $100,000, with some houses selling for $50k or less.
For first-time buyers in the Delta, the challenge is less about price and more about economic opportunity. The region offered the cheapest real estate in Arkansas – a family with a moderate income could easily buy a home, or even pay cash for a fixer-upper. The downside is limited jobs, amenities, and population decline.
Other Rural Areas and Smaller Cities
Outside of NWA, Central Arkansas, and the Delta, other regions had mixed trends:
- North-Central/Ozark Region: Areas with towns like Mountain Home, Harrison, and Eureka Springs saw some uptick in homebuying due to remote work and retirees seeking a rural lifestyle. The vacation home trend touched the lakes here (Bull Shoals, Greers Ferry, etc.) in 2020-21.
- Southern and Western Arkansas: Places like El Dorado, Pine Bluff, or Fort Smith had stable, slow markets. These economies depend on industries like oil, timber, or manufacturing. Fort Smith remained very affordable – a middle-class family earning well under $100k could easily buy a home there.
By 2023, Arkansas had a big gap between its pricey urban areas and cheap rural areas. A home in Benton or Washington County (NWA) could cost 2-3 times what a similar home would cost in the Delta or a small town in south Arkansas. This gap widened during 2018–2023, underscoring that Arkansas has multiple housing markets with vastly different conditions.
Financing Trends: Mortgages and Assistance
Mortgage Types Used by First-Time Buyers
First-time buyers often use government-backed loans that allow lower down payments. Nationally, about 52% of first-time buyers used conventional loans, 29% used FHA loans, and around 9% used VA loans. Arkansas likely had higher FHA/USDA usage due to its rural areas and moderate-income buyers:
- FHA Loans: Popular for first-timers because they allow as little as 3.5% down and have more lenient credit requirements. Over 80% of FHA’s purchase loans nationwide go to first-time buyers.
- USDA Loans: Arkansas, being largely rural, sees significant use of USDA Rural Development guaranteed loans, which offer 0% down payment for homes in eligible rural areas.
- VA Loans: Arkansas has military personnel and veterans who can use VA loans with 0% down and no PMI.
- Conventional Loans with PMI: Many first-time buyers still used conventional mortgages with private mortgage insurance (PMI). In 2023, about 5,592 homebuyers in Arkansas used private PMI, and 53% of those were first-time buyers.
Down Payment Assistance and Programs
Many first-time buyers, especially younger ones, don’t have substantial savings for a down payment. Arkansas offers some state and local programs to help. The Arkansas Development Finance Authority (ADFA) runs programs like StartSmart and down payment assistance grants or second loans.
From 2018 to 2023, thousands of Arkansans utilized such assistance. In Little Rock, the city government also has a down payment assistance program for low-income first-time buyers.
A notable trend is the rise of family financial help. A recent study found 38% of young buyers used money from their family for the down payment. This likely holds true in Arkansas as well, where tight-knit families often support each other.
Interest Rate Environment and Impacts
The period saw rates go from about 4.5% in 2018, down to under 3% in 2020, then up above 6-7% by 2023. This whiplash greatly influenced what mortgages first-timers chose:
- In 2020–21, many buyers locked in 30-year fixed loans at incredibly low rates (2.7–3%).
- With rising rates, some buyers in 2022–23 turned to alternatives like 5-year adjustable rate mortgages (ARMs) or seller-paid rate buydowns to temporarily get a lower rate.
The surge in rates also led to the “golden handcuffs” effect for existing homeowners – they didn’t want to move and lose their low rate. As a result, first-time buyers formed a bigger share of the market, since repeat buyers retreated. By 2023, about 56% of mortgage offers in Arkansas were to first-timers – one of the highest shares in years.
Conclusion
The past five years (2018–2023) have been a whirlwind for first-time homebuyers in Arkansas. They’ve seen home prices leap to new highs, faced fierce competition during the pandemic boom, and then grappled with rising interest rates.
Regionally, Arkansas’s housing scene ranged from the red-hot Northwest, where newcomers and upsizing families drove a frenzy, to the sleepy Delta, where prices stayed low and buyers were scarce. Cities like Little Rock saw moderate, steady trends.
Despite challenges, many Arkansans did achieve the American dream of buying their first home in this period. They did so with determination, creativity in financing, and often a bit of help – whether from family, government programs, or the luck of low interest rates at the right moment.
As of 2024, the market appears to be calming. Prices in Arkansas aren’t soaring like before, and interest rates may eventually settle. This could give upcoming first-time buyers a better shot, especially if more homes are built to meet demand. The trends of the last five years have underscored the importance of affordability and access: when homes are within reach, first-time buyers flourish, but when costs surge, they get squeezed out.
References
- Arkansas homeowners’ ages are rising – Axios NW Arkansas
- Arkansas homeowners cling to low-rate mortgages – Axios NW Arkansas
- Buyers: Results from the Zillow Consumer Housing Trends Report 2023 – Zillow Research
- Housing Market & Prices in Arkansas 2023 – Home Value Estimator
- Home Prices Hit New Record High, Big Increases in Florida – Money.com
- Demand For Vacation-Home Mortgages Fell 40% in 2023 As Housing Costs Rose to Record High – Redfin News
- First-Time Home Buyers Shrink to Historic Low of 24% as Buyer Age Hits Record High – National Association of Realtors
- Property Values By State from 2005-2017 – National Association of Realtors
- State Mortgage Insurance | Arkansas – U.S. Mortgage Insurers
