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How Much Does it Cost to Build a House in Fayetteville, Arkansas?

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Located in the Northwest Arkansas (NWA) region, Fayetteville is the county seat of Washington County. Home to 95,230 people, the city is the second-largest in the state behind Little Rock. It is surrounded by the Ozark Mountains and is also known as the “Athens of the Ozarks.” The city attracts numerous people for its abundance of state parks, green spaces, and walking trails. Other characteristics that define the city include its connection to the Civil War, former President Bill Clinton, and the University of Arkansas.

The Cost of Building a Home in Fayetteville, Arkansas

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Over the last few years, the city has seen developments in economy, education, and population. In 2019, Fayetteville employs around 42,200 people. Education is the major sector of the city, which is further strengthened by the presence of the University of Arkansas and Fayetteville School District. Other dominant sectors include health care, retail trade, agriculture, forestry, and mining. In addition, the city continues to aim for economic vitality by supporting and expanding local businesses to foster an environment for entrepreneurship and innovation.

In 2021, Arkansas saw a 44% growth in its population. The state has the highest percentage of people moving in as compared to any other in the country. In Washington County during the past decade, the population grew by 21.1%, and more than half of these residents went to Fayetteville.

Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method, according to Home Builder Digest.

As a college town, remote jobs in the area are among the positive gains that the COVID-19 pandemic has contributed to the housing industry. It remains among the most affordable places to live in the country as students are lured back to the city because of the low cost of living.  As growth in population and the economy favor Fayetteville, home construction is in the spotlight.

The average home construction cost in the U.S. is $207 per square foot. In Fayetteville, the average cost to build a mid-range home is $180 to $200 per square foot. This is an estimated average cost and may increase or decrease depending on the home’s construction. It also varies from city to city due to the individual rules and regulations. The costs to build a new home can be further categorized into hard costs and soft costs.

Hard Costs

Hard costs are all the physical costs that are associated with the construction of the house. It includes the wood and metal supplies, the equipment, and other materials that go into building the home. These hard costs are also the things that are visible to homeowners during the construction of the house, from the installation of flooring to putting the last roof shingle into place.  

In Fayetteville, the construction of new homes is flourishing. As the pandemic prompted people to work from home and with the state-wide population growth, the average cost to build in the city increased. According to local home contractors, in 2016, the cost to build a home in Fayetteville starts at $110 per square foot and can go as high as $150 per square foot and above. Today, a value-conscious home could cost homeowners between $150 to $180 per square foot. For a mid-range home, it could cost between $180 to $200 per square foot. For a high-end home, it could cost homeowners between $200 to $280 per square foot. These ranges may go higher depending on the build design and intricacies that come into it.  

In late December 2021, framing lumber prices cost $1000 per thousand board feet. This cost has seen a 167 increase since late August of the same year. Framing is important in construction as it will support the building and contribute to its stability. For flooring, installation in Fayetteville ranges between $2,156 to $3,106. Depending on the type of flooring, the cost may increase or decrease. Hardwood flooring could cost around $8000 for a 1000-square-feet build. The most common siding used in the U.S. is vinyl. The cost to install this type in the city is $3 to $4 per square foot. Roofing in Fayetteville varies depending on the size of the house and type of roofing, the average cost of metal roofing ranges from $6.20 to $9.70 per square foot. For a 2,000-square-feet home, metal roofing could cost from $12,400 to $19,400.

Installation of heat, ventilation, and air conditioning (HVAC) units in Fayetteville is valued at around $5,000. For plumbing service, it could cost around $67.58 per hour. While electrical wiring costs from $83 to $666, this estimate includes the materials and types of equipment that will be used. Ensuring that these are installed properly, homeowners should also take into account the cost of the monthly or annual maintenance and repair of these utilities. 

Figure 2. Soft cost percentage and average price range of additional fees, determined from the overall cost of custom home building in Fayetteville, Arkansas.

Soft Costs

While hard costs fall into the physical progress of the construction, soft costs are those that do not directly associate with the actual construction of the home. Usually, these costs are settled even before the construction begins. These expenses include the cost of the land, permit payments, and fees for architects and designers. 

Cost of the Land

Arkansas is also known as the “Nature State.” Fayetteville offers a number of natural spaces for people who have an interest in the outdoors. These natural environments include 70 parks, which collectively have 40 miles worth of paved and natural trails. Lakes are also abundant in the city, which offer fishing and other recreational water activities. 

According to the listing website Zillow, land sizes in Fayetteville can go as large as 88,426 square feet. The average land cost in the area is $138,500, with an average of $8.11 per square foot. As of this writing, the lot that cost the most in the listing is $470,000 with 24,829 square feet of land. This lot is located in the heart of the city near the VA Medical Center-Fayetteville and Gregory Park. The cheapest land in the listing costs $29,900 with 10,890 square feet of land. This land is undeveloped and is located near Centennial Park. 

Permits and Other Fees 

Homeowners who are looking to apply for permits in Fayetteville must first register onto the local government’s Citizen Self-Service Portal. This portal will allow homeowners to access permit applications and handle the payments for them. 

According to the fee schedule information sheet, homeowners must pay a fraction of $1,000 for material and labor costs (although this fee schedule does not specify if the fees are for residential or commercial buildings). Fractions of $1,000 are considered to the next $1,000. Thus, for material and labor costs that do not exceed $1,000, no fee shall be paid, unless an inspection is required, in which case a $20 will be charged for the first inspection. For material and labor costs that exceed $50,000 and more these fees are as follows: 

Architecture and Design Fees

Planning to build a home almost always starts with an idea, and then a blueprint follows. Without this basis, the construction project may stray from what homeowners initially envisioned. On the national average, architects and designers usually charge from 5 to 20% or about $2,000 to $15,000 of the total construction cost. This range is from the national average fee and may change depending on the location of the project. To ensure a better understanding of these fees, homeowners are advised to talk to local architects and designers for a clearer estimate of their projects. 

How do the custom home building costs in Fayetteville compare to other nearby cities?

More than 40% of vacant residential pieces in the major cities in the NWA region have disappeared in the past decade. Due to this, demand for housing and home construction costs are also on the rise. A study shows that Washington County saw a record number of homes sold during the second half of 2021. This record prompted an increase in home prices to almost 16% from the year prior and 54.4% in the past five years. 

According to the Skyline Report, the average home price in Washington County in the last six months of 2021 was $311,517. In comparison, Benton County’s average home price was $345,517. Out of all the cities in the NWA region, the Skyline Report shows that Bentonville has the highest average median home price at nearly $450,000. This is followed by Rogers and Centerton, which have median home prices that are valued at around $350,000 to $400,000. Fayetteville comes next, with a median home price of nearly $325,000. The closest average to Fayetteville’s is Springdale, which comes in at around $300,000 to $325,000. Other cities with lower median home prices are Bella Vista and Siloam Springs. 

The Skyline Report is a semi-annual report on the residential and commercial property markets in the NWA region. 

What Leading Custom Home Builders and Architects that Serve the Fayetteville Area Say

With the recently released study on the housing market in the NWA region, homeowners got a glimpse of the industry that is under pressure to reach new heights. Due to this, many home builders in the area are struggling to keep up with the demand. Additionally, factors including the rising cost of materials and supply chain issues are affecting the building process. 

Amanda Edgmon, who owns Stone Harbor Custom Homes, mentioned that the pandemic has affected the movement of supplies in the industry. She said that while many believed that the pandemic-related supply chain issues would decrease towards the end of 2021, the demand for new construction across the U.S. and specifically in Northwest Arkansas has not allowed for the stabilization of either material pricing or labor costs. As for 2022, she added that the year will remain challenging due to the costly availability concern of essential materials in home construction. 

This concern has also been expressed by Celtic Custom Homes owner Lee Scarlett, as it is time consuming for both homebuilders and homeowners. Lee shares, “A project that used to take 12 months now takes 14 to 16 months because we simply can’t get the materials we need.” With the supply chain issues having a domino effect on construction, the time it takes to build a home takes longer. All materials that are tied to oil, which includes lumber, concrete and aluminum, have gone up in prices. “Gas has also gone up and delivery charges have doubled. Add to that the slow supply chain and it’s a perfect storm. We are now having to order windows and garage doors before we even start the home, and even then we don’t get them when we need them.” Scarlett shared. 

Lauri Matisse, the owner of Matisse Studio, shared that clients are hesitating to continue with their projects due to the increased building costs. “Some people are worried about cost. Some mid to high-end clients [are] backing out because of the purchase of land plus the cost per square foot getting to a point of not being realistic in Northwest Arkansas.” In addition, Matisse shared that other factors including the stock market swings and unstable inflation and supply conditions are affecting the timeline of home construction. 

Considering these, home contractors are advising their clients to have patience. As the prices move unpredictably, it can affect the total building cost of new construction. “Across our market, building may look a little different soon, as we start to see adaptable home builders overhaul their strategic approach to provide greater certainty in supply procurement and supply chain,” Edgmon added. 

The Future of Fayetteville’s Residential Construction Industry

The state of Arkansas has recently seen an increase in the number of people wanting to live in the state. An amount of this movement went to Fayetteville. U.S. News and World Report recently ranked the city seventh on its best places to live list, highlighting its friendly residents, low cost of living, and natural environment. This influx resulted in an increase of homes being sold statewide, with more demand for new homes in Fayetteville. 

“Those looking to build can continue to expect fluctuating build schedules, ever-changing material pricing, and limited material choices due to availability,” Hamilton shared when asked about the future of Fayetteville’s construction industry. “Customers may also see changes in home financing through an extended amount of time to secure loans and a requirement of reserve funding.” 

Despite the rising cost of building a house, an increase in new home construction has also been seen in the second half of 2021. According to the report, new home construction has gone up by almost 41% in the NWA region. Approximately 1,370 homes were under construction during the second half of 2020, and that grew to 1,933. In addition, than 3,500 additional multifamily housing units have been announced or are under construction in Fayetteville to accommodate the population growth. 

Although the city has a low cost of living, researchers and industry experts are concerned that the rising housing prices in Fayetteville might negatively impact the city’s affordability. Inexpensive housing is one of the major factors that entice people to move from one city to another. Today, homebuilders are telling their clients that the construction process might take more time than before. Thus, processes that take longer to finish could equate to more expenses.

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