The Phoenix Housing Market Is Shifting Fast: What Buyers and Sellers Need to Know in 2025

The Greater Phoenix housing market is shifting—and fast. As we close out the first quarter of 2025, several clear trends are emerging that both buyers and sellers need to understand. Whether you're planning to move, invest, or just keeping an eye on the market, now is the time to take notice.

In this post, we'll break down everything that's happening—from rising supply and shifting buyer power to softening prices in key areas, mortgage rate movements, and what it all means for your next step.

📈 Inventory Is Rising—Fast

Active listings are growing at one of the fastest paces we’ve seen in years. In 2021, 2022, and 2023, listing counts dropped after the first few weeks of the year. But in 2024, that trend reversed—and in 2025, it's accelerating.

• Active listings jumped from 20,000 to nearly 25,000 in just 11 weeks.

• This increase gives buyers more choices and stronger negotiating power.

• For sellers, the growing supply means it’s getting harder to stand out and secure top dollar.

Even though interest rates have eased slightly, demand is still not keeping up with inventory. Until that changes, the market will continue to tilt in favor of buyers.

🏡 Builder Incentives Are Rising, But Sales Aren’t

Homebuilders are offering more incentives than they were last month—but they’re seeing slower sales. One key reason: a lack of quick move-in homes. Many buyers want to close before summer, but builders don’t have enough completed inventory to meet that demand due to lower starts in prior quarters.

This mismatch is giving resale homes a window of opportunity—especially those that are move-in ready and well-priced.

💸 Mortgage Rates: Down…But Not Dramatically

Mortgage rates are heavily influenced by the 10-year Treasury yield, which dropped from 4.79% on January 14 to 4.16% on March 3. Normally, we’d expect a bigger drop in mortgage rates. So why the disconnect?

Lenders are still applying a large “risk spread”—a buffer to account for uncertainty in the economy. This spread remains high, limiting how much mortgage rates can fall, even when Treasury yields drop.

Still, rates have eased from a peak of 7.26% in January to an average of 6.6% in March, which is good news for buyers looking to improve their affordability.

⚖️ We’ve Reached Market Balance—for the First Time Since 2011

The Cromford Market Index (CMI), which measures the balance between supply and demand, hit 100 this month. That’s considered a “balanced” market—and it’s the first time we’ve seen this since May 2011.

But there’s a twist.

• The supply index is normal, but the demand index is 19% below normal.

• That means we have about 24% more homes for sale than we need based on current buyer activity.

• In other words, we’re only balanced because demand is weak—not because inventory is out of control.

This is why the market feels like a buyer’s market, even if prices haven’t adjusted yet.

🏙️ Market Breakdown by Area

Here’s how the major cities in the Phoenix Metro area are trending:

• 9 cities remain seller’s markets

• 2 cities are balanced

• 6 cities are now buyer’s markets, including:

  • Peoria

  • Tempe

  • Goodyear

  • Queen Creek

📉 13 cities have deteriorated for sellers this month, while only 4 improved.
📈 The most improved city? Avondale, up 12%.
📉 Cities shifting most toward buyers: Tempe, Goodyear, and Queen Creek.

Secondary Market Snapshot:

Seller’s Markets:

• Anthem

• Apache Junction

Buyer’s Markets:

• Litchfield Park

• Gold Canyon

• Laveen

• Sun City West

• Casa Grande (a very strong buyer’s market)

💬 Why Aren’t Prices Crashing Yet?

This question is coming up a lot—and understandably so. Phoenix has been in a buyer’s market for 3 of the last 4 months, yet the median home price is still up 4.3% year-over-year.

Here’s why pricing isn’t crashing (yet):

• Real estate moves slowly. A typical home takes 30 days to go under contract, another 30–45 to close, and then a few months of data to show a trend. Unlike stocks, home prices don’t react overnight.

• Homeowners have low mortgage rates and strong equity. They don’t need to sell, and many will rent instead of dropping their price.

• Foreclosures are still low, at around 1,300 in Maricopa County, up from 870 last year but far below the 50,000+ during the 2009 crash.

• Demand is down, but Arizona remains one of the top relocation states in the U.S. thanks to job growth and affordability.

Unless interest rates drop significantly, prices will likely start to soften in the coming months—but this will be a gradual shift, not a dramatic crash.

🔍 Segment Performance: Not All Price Ranges Are Equal

Different segments of the market are performing very differently right now:

• 📉 Condos and townhomes under $400K are down -4.2%

• 📈 Luxury homes between $1M–$1.5M are up +5.5%

• 🏘️ Most other price ranges are seeing modest growth of 1–2%

Buyers are being pickier. Desirable homes in great locations with move-in-ready features are still performing well. Homes that need work or are in oversupplied areas are seeing downward price pressure.

🛍️ What This Market Means for Buyers

If you’re a buyer, you’re in a stronger position than you’ve been in years:

• ✅ More homes to choose from

• 💬 Less competition and stronger negotiating power

• 📉 Average discount off list price: 1.7% (vs. 1.4% last year)

• 🔥 Many of my clients are securing up to 5% off asking price

And remember—any dip in mortgage rates boosts your purchasing power significantly.

📉 What This Market Means for Sellers

For sellers, the path to success requires more strategy:

• 🏠 Listings are at their highest level since 2015

• 🔻 Price reductions are up 58% year-over-year

• 💡 Sellers need to invest in presentation—from staging and neutral paint to appliance upgrades

💰 Negotiation Trends:

• Homes under $1M are selling for 98.3% of the list price, down from 98.6% last year
  → On a $500K home, that's an $8,500 discount vs. $7,000 in 2024

• Homes over $1M are selling for 95.4%, down from 96.4%
  → That’s a $46,000 discount on average, up from $36,000 last year

The good news? If rates continue to dip below 6.5%, buyer demand will likely improve—and give sellers more momentum heading into summer.

🧠 Final Thoughts: A Market in Transition

This is only the fourth buyer’s market in Greater Phoenix in the last 25 years. Yes, the 2006–2008 crash was traumatic, but today’s market is built on a much more stable foundation.

We’re in a transitional phase—not a boom, not a bust. But a rebalancing.

• Buyers: This is your chance to find value, negotiate well, and avoid bidding wars.

• Sellers: Be prepared, be flexible, and price competitively to win in today’s market.

📌 As we move through spring, I’ll continue monitoring how supply, demand, and rates evolve. If you're considering a move—buying, selling, or investing—let’s talk strategy. A smart move today can set you up for long-term success.

📞 Ready to make your move in 2025?
Let’s build a custom game plan that aligns with your goals and today’s market reality.