Phoenix Real Estate Market Update: What You Need to Know

By Dave Zajdzinski

Dave Zajdzinski and the team bring 40 + years of real estate experience to home buyers and sellers throughout Arizona.

The Phoenix housing market is going through some noticeable changes. Inventory is climbing, buyer activity is slowing, and sellers are adjusting their strategies. If you are planning to buy or sell, understanding these shifts can give you an advantage. The numbers tell a clear story about where the market is headed. Let’s break them down.

Months of supply increasing. A balanced market in Phoenix typically has about 4.5 months’ worth of housing inventory. Right now, we’re at 5.1 months—a level we haven’t seen in a long time. A year ago, it was at 4.2, indicating that supply is rising.

Contract ratio shows market cooling. The contract ratio, which measures how many homes are under contract compared to active listings, has been shifting. A balanced market falls between 30 and 60. Recently, it dropped to 28 but has rebounded slightly to 31.3.

More listings, fewer pending sales. Active listings have grown to 21,602 while pending sales are at 3,986. Two years ago, there were fewer active listings at 16,254 and more pending sales at 4,647. This gap suggests demand has slowed, contributing to a more balanced or even buyer-favored market.

Market index nears buyer’s territory. The market index, which gauges overall market health, sits at 88.5. A balanced market ranges from 90 to 110, so we’re hovering near a buyer’s market. Just a year ago, this index was at 116, which clearly favors sellers.

Price drops are the last to show up. When markets shift, sellers first offer more repairs and cover closing costs before lowering prices. While home prices have held steady, we’re seeing buyers negotiate significant concessions. Some recent buyers have closed at $60,000 under appraised value while also securing repair coverage and closing cost assistance.

What’s next for home prices? Historically, home prices only dip for a short period. The last price drop lasted about two months before values rebounded. If interest rates come down, expect home prices to rise again. The real estate market often moves like a seesaw as higher rates bring lower prices, and lower rates push prices back up. Understanding these recent market shifts will ultimately help you stay ahead of the curve. If you have questions or need guidance, don’t hesitate to reach out. You can call me at 480-332-6468 or send an email to dave@zteamaz.com. I’m here to help you navigate the market!