Arizona Housing Market Update: Key Trends & Insights for January 2025

Remember when I mentioned a few months ago that it had been 14 years since buyers had this much of an advantage? Well, if you waited, that rare window is closing fast. The Arizona real estate market is shifting, and while some outlying areas still favor buyers, overall conditions are moving toward balance. Demand is rebuilding, even as mortgage rates remain high, and the coming months will determine just how much leverage buyers can still hold.

The big question now is: How much new inventory will hit the market? If new listings remain low, we’ll continue trending toward a balanced market. If a surge in supply occurs, buyers might get one last shot at negotiation power—but time is running out. The next month will be critical.

New Construction’s Impact on the Market

No real market update is complete without discussing new construction, because it plays a major role in shaping market conditions—even if you’re not buying a newly built home.

In 2024, new construction made up over 30% of all home sales, pulling many buyers away from resale properties. Builder stocks soared through September but lost most gains by year-end as high mortgage rates forced them to offer aggressive incentives—like 4% interest rates—which came at a major cost.

Shifts in New Construction Supply & Pricing

Right now, the number of completed but unsold new homes is rising nationwide, increasing builder flexibility in negotiations, especially for move-in-ready homes. However, builders are pulling back on production, with December permit counts in Maricopa and Pinal Counties hitting their lowest levels since early 2023.

Builders are also facing two major policy changes that could impact costs and inventory:

1. Higher tariffs on imported materials from Canada, Mexico, and China, increasing building costs.
2. A crackdown on undocumented labor, which could cause construction delays due to skilled labor shortages.

Despite these challenges, home prices are still dictated by supply and demand. If builders struggle to pass higher costs onto buyers, new home sales could slow, reducing competition for resale homes—potentially driving up existing home prices until new builds regain their competitive edge.

Arizona Market Snapshot: January 2025

Market conditions are shifting, and supply is growing faster than demand:

• Active listings (excluding those under contract) have jumped 11.9% (+2,324 listings) since the start of the year.
• Listings under contract have increased 13.3%, but that’s far below last year’s 23.8% growth—a sign that demand is improving, but not as quickly as supply.
• Sellers are facing more negotiation pressure, making pricing strategies and incentives more important than ever.

Current Market Breakdown:

• 9 Seller’s Markets
• 3 Balanced Markets
• 5 Buyer’s Markets

Among secondary cities, we’re seeing:

• Buyer’s markets in: Sun City, Casa Grande, Sun City West, Litchfield Park, and Arizona City.
• Balanced markets in: Gold Canyon and Laveen.
• Seller’s markets in: El Mirage, Apache Junction, Anthem, and Tolleson.

With inventory climbing faster than demand, sellers must price competitively to avoid extended listing times and deeper price cuts.

For Buyers: There’s Still Opportunity in a Growing Market

The 2025 buying season is off to a strong start, with January seeing the highest new listing volume since 2020. More inventory means more choices and better opportunities for negotiation, and many sellers are still open to offering incentives.

Key Insights for Buyers:

✔ Mortgage rates remain around 7%, limiting affordability for some but not deterring well-qualified buyers.
✔ Luxury home sales ($1M+) surged 37% year-over-year, while homes under $1M increased by only 11%.
✔ Inventory is at its highest January level since 2016-2017, with 21,000 active listings.
✔ Home prices remain stable, and sellers are offering strong incentives.

Mortgage rates won’t stay high forever—my advice? Get pre-approved now and explore your options before competition increases.

For Sellers: Strategic Pricing and Incentives Are Key

January started slowly for sellers, but certain price points and locations remain hot:

• $250K-$400K: High demand in Surprise, Waddell, Avondale, Tolleson, Southwest Phoenix, and parts of Mesa, North Gilbert, and Chandler.
• $400K-$500K: Strong activity in the Southeast Valley, Tolleson, and North Glendale.
• Luxury condos ($1.5M+) continue to perform well in Scottsdale and Paradise Valley.

However, the non-luxury condo market is struggling:

• 67% increase in competing supply under $400K.
• Zero contract activity in some areas.
• Flat appreciation since January 2024.

Additionally, rising homeowners insurance costs—especially in condos—are pushing more landlords to sell due to increasing HOA fees and lower rental returns.

What Sellers Need to Do Now:

✔ Price strategically. Overpricing will backfire, leading to extended market times and deeper price cuts.
✔ Offer incentives. Buyers are looking for rate buy-downs, closing cost assistance, and flexible terms.
✔ Keep properties in top condition. Homes that show well attract better offers.

With peak selling season running from now through May, this is the best time to list, but success depends on the right pricing and marketing approach.

Looking Ahead: What to Expect in 2025

The Arizona housing market is in transition, but here’s what we can expect:

🔹 Seasonal trends favor sellers, but mortgage rates will play a key role in overall activity.
🔹 New construction challenges could lead to reduced competition for resale homes.
🔹 Supply is growing faster than demand, giving buyers more negotiating power—but this window won’t last forever.

Final Thoughts: Don’t Wait to Plan Your Next Move

As 2025 unfolds, the Greater Phoenix market is stabilizing, but inventory shifts and mortgage rates will determine whether buyers or sellers hold more leverage in the coming months.

If you’re a buyer, getting pre-approved now ensures you’re ready to act when the right home hits the market. If you’re a seller, setting the right price from day one and leveraging incentives can mean the difference between a quick sale and a long wait.

Real estate moves in cycles, and those who plan ahead gain the biggest advantage.

Let’s create a strategy tailored to your 2025 real estate goals. Reach out today, and let’s start planning!