The Greater Phoenix real estate landscape has been gaining strength over the past few months, but recent data is flashing some warning signs of a potential cooldown. In this market update, we’ll explore whether the latest trends point to a new downward turn or are simply a typical seasonal shift.
Mortgage rates dipped last week after the release of June’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports, both of which indicated inflation rising less than expected. Rates fell back into the mid-to-upper 6% range, providing a bit of relief for homebuyers. This dip could help boost demand, which has been lagging in Greater Phoenix.
Despite the rate reprieve, demand remains higher than supply. The Cromford Market Index (CMI), which tracks market strength, shows demand running about 20% below normal. Meanwhile supply is 50% below average. Obviously, that mismatch is good for sellers.
The CMI shows a mixed picture around ‘The Valley’. Cities like Chandler, Paradise Valley and Fountain Hills have seen seller’s market strength. However, Cave Creek, Glendale and Tempe are all trending toward a buyer’s market as their CMI metrics deteriorate month-over-month. Overall, more cities are experiencing softening than strengthening.
Phoenix housing demand is very sensitive to mortgage rate fluctuations. The rapid rate hikes since March are dampening buyer enthusiasm, resulting in declining demand. It’s unclear whether the market is fully absorbing the impact yet. Some experts say more rate increases are still needed to tame inflation, while others see the economy in a “Goldilocks” moment.
With demand dipping, a key question is whether the overall Phoenix real estate market is simply experiencing typical summer doldrums or if a more pronounced cyclical downturn is ahead. If demand doesn’t rebound as rates stabilize, it could signal broader softening rather than just a seasonal slump. We’ll be monitoring market metrics closely for signs of which way the wind is blowing.
The Phoenix market remains in flux as economic forces weigh on housing. For buyers and sellers, staying vigilant about the subtle shifts happening in local submarkets is key to making smart real estate moves. Reach out if you have any questions about how to navigate today’s changing dynamics. And thank you for reading LUXE BLOG.