The Greater Phoenix housing market continued its steady rebalancing through July 2025. Prices are softening, inventory is adjusting, and buyers are in one of the strongest positions we’ve seen in years. But this is not 2008, and it’s not a crash. It’s a recalibration — driven by affordability, interest rate pressure, and a shift in behavior from both buyers and sellers.

If you’ve been watching the market or considering a move, this month’s update brings important insight.

📉 Prices Are Sliding, but It’s Not a Fire Sale

July brought another dip in home prices across the Valley. The average price per square foot has now dropped 9.2% since March, and the median sale price fell to $445,000, down from $465,000 four months ago.

But here’s the key: this isn’t driven by panic selling or distressed inventory. Instead, it’s coming from a quiet retreat by sellers who are unwilling to meet buyer expectations. Cancellations are up 46% compared to last year, and expired listings have jumped a staggering 79%. Many sellers are simply choosing to wait — or turn to renting — rather than list in a market they perceive as “soft.”

📊 Inventory Isn’t Surging — It’s Repositioning

While total supply dipped 6% over the past month, what’s more telling is how that supply is shifting. Active listings over $800K dropped by 14% in just five weeks, with luxury homeowners pulling out at a faster-than-usual seasonal rate.

In Paradise Valley, active inventory declined by 39% in just six weeks — pushing it into one of the Valley’s strongest seller markets again. Yet overall, the region remains buyer-friendly.

At the more affordable end of the market, homes priced between $250K–$400K saw a boost in activity. Sales were up 10–38% in June, and prices have dropped around 3.5% year-over-year. For buyers, especially first-time or move-down buyers, this is a window of opportunity.

🛠️ New Construction: Incentives Are Stronger Than Ever

Builders are doing the heavy lifting when it comes to market momentum. Across the Phoenix metro, builders are offering aggressive incentives to draw buyers — and they’re working.

Here’s what we’re seeing right now:

• 30-year fixed rates in the 3–4% range through buydowns

• Closing cost credits and appliance packages

• Backyard landscaping or custom upgrade packages

Some builders are even matching competitor incentives, which is rare in a typical cycle. But with an oversupply of completed, unsold homes and pressure to close out Q3, urgency is high.

Still, prices for new builds are easing. Factoring in incentives, new home pricing is down 1.5% year-over-year, and buyers who act quickly may be able to lock in historically low rates before fall demand picks up again.

🏡 What Buyers Need to Know Right Now

The buyer's market is here — especially in the sub-$500K range.

Home shoppers aren’t facing the fierce competition or bidding wars of the past few years. Instead, they’re seeing:

• More price reductions

• Higher seller concessions

• Builders offering long-term rate buydowns

• The ability to negotiate repairs, upgrades, and even remodel credits

While demand has cooled from its early-year high, homes in affordable ranges are still moving — especially those that are move-in ready or well-located. In fact, sales between $250K–$300K rose 38% in June, with condos in that range declining in price by 5.5%, signaling further room for negotiation.

Rents, meanwhile, have remained stable at $1.37 per square foot since 2021, making it cheaper to rent in real terms. But for buyers planning to stay put long-term or looking for investment properties, now is a strategic time to buy before seasonal activity picks up again.

📉 What Sellers Should Watch For

For sellers, this is a market of strategy, not speed.

The average home is spending 44 days on market, with condos and townhomes sitting even longer — especially those with high HOA costs. Only 13% of July closings were above list price, and over 55% involved concessions.

Sellers holding out for 2022-style offers are facing tough reality checks. That said, the market is still rewarding those who:

• Price correctly from the start

• Present the home well (photos, staging, curb appeal)

• Are open to negotiation

Homes that check all the boxes are still selling — especially in lower-inventory areas or with builder competition nearby. For luxury listings, July is typically when sellers step back, but a short summer listing can still offer valuable market feedback to prepare for fall.

⚠️ A Subtle Rise in Distress

Completed foreclosures in Maricopa County rose to 136 in July — the highest monthly number since 2019 and up from just 31 a year ago. While this isn’t a crisis, it’s a trend worth watching.

Interestingly, the early-warning signs — such as Notices of Trustee Sale (NOTS) — haven’t surged, indicating that most homeowners are still able to hold on, especially with sub-4% mortgage rates locked in. But as homes take longer to sell and buyers negotiate more aggressively, distressed owners may face fewer exit options.

This is one reason we may start to see more bank-owned (REO) inventory hitting the market later this year.

💡 Final Thoughts: Strategy Is Everything

The Phoenix housing market is evolving — not crashing. Affordability is driving decisions on both sides of the table.

Sellers aren’t desperate. Buyers aren’t overbidding. And with interest rates hovering near 7%, both parties are becoming more selective and more strategic.

What stands out most?

• The lack of urgency from buyers

• The decline in closings over list price

• The pullback in new listings from sellers

This is a market that rewards preparation and patience. For buyers, it’s a unique opportunity to negotiate favorable terms. For sellers, it’s a reminder that pricing and presentation matter more than ever.

👋 Ready to Navigate the Shift?

Whether you're a buyer looking to take advantage of incentives or a seller planning a fall relaunch, understanding what’s happening city by city and price range by price range is key.

📩 Let’s connect for a strategy session tailored to your situation.