What Effect Are Recent Economic Shifts Having on Phoenix’s Housing Market?

Phoenix Real Estate Is Adjusting — Here’s What’s Really Happening

Phoenix has always been a dynamic housing market — but the past 12 months have brought noticeable shifts.
As interest rates move, inventory levels rise, and buyer patterns change, Phoenix homeowners and buyers are navigating a more balanced, more strategic environment.

CITIEA breaks down the biggest factors influencing Phoenix real estate right now — and how they’re expected to shape the market heading into 2026.

1. Interest Rate Fluctuations Are Cooling and Redirecting Demand

Rate changes have become one of the most influential forces in the market.

What we’re seeing in Phoenix:

• Mortgage rate dips spark short bursts of strong buyer activity.

• Rate spikes slow showings and offer activity, especially under $600K.

• Many buyers are waiting for “the right moment” before making big moves.

Impact on Phoenix real estate:

• Homes under $500K are the most sensitive to rate shifts.

• Cash buyers and investors continue to support the market.

• Move-up buyers are more cautious, often choosing to stay put instead of upgrading.

MLS notes:
Recent Valley-wide MLS reports show pending sales rising when rates improve, but leveling off when rates increase — a sign of rate-driven buyer behavior.

2. Inventory Growth Is Creating a More Balanced Market

Phoenix inventory has increased compared to the ultra-tight conditions of 2020–2022.

What more inventory means for today’s buyers:

• More options across most price points.

• Less bidding-war pressure.

• More negotiation room for homes listed longer than average.

What it means for sellers:

• Pricing strategy is more important than ever.

• Homes needing updates stay on the market longer.

• Well-prepared listings — updated, clean, and professionally presented — still move quickly.

MLS snapshot:
Valley inventory has grown year-over-year, giving buyers more choices and reducing market speed in some neighborhoods.

3. Population Growth & Job Strength Continue to Support Demand

Despite shifts in the national economy, Phoenix remains one of the strongest long-term real estate markets in the country.

Why demand remains stable:

• Ongoing population growth

• Continued employer expansion in tech, healthcare, transportation, and logistics

• Affordable cost of living compared to major coastal cities

• Strong migration from California, the Midwest, and Pacific Northwest markets

This steady inflow helps keep housing demand healthy, even during broader economic uncertainty.

4. Investors Are Still Active, but More Selective

Investors haven’t disappeared — they’ve just shifted their strategy.

Current investor trends:

• Fewer sight-unseen purchases

• Stronger focus on cash-flowing neighborhoods

• Increased interest in newer builds with lower maintenance

• Desire for well-priced, move-in-ready homes

As rents stabilize and long-term appreciation remains strong, Phoenix continues to be an attractive market for both small and large investors.

5. What Phoenix Sellers Should Expect Heading Into 2026

If you’re considering selling, the market is still favorable — but strategy matters.

Phoenix sellers can expect:

• Slightly longer days-on-market than 2021–2022

• Strong interest for homes priced correctly

• Higher buyer demand when rates ease

• Increased competition from new construction

• Better performance for updated and staged homes

Homes priced right are still selling well — especially in neighborhoods with strong amenities and low turnover.

6. What Phoenix Buyers Should Expect Right Now

For buyers, the current market offers more opportunity and less pressure than in recent years.

Expect:

• More inventory to choose from

• Occasional negotiation opportunities

• Flexible timing (less urgency than past years)

• A mix of new-build and resale options

• A steady, slow climb in pricing rather than rapid spikes

If buying aligns with your long-term goals, today’s environment is far more manageable and predictable than during the post-pandemic surge.

What’s Ahead for 2025–2026 in Phoenix Real Estate?

Based on current trends, Phoenix is likely to see:

• Moderate, stable price growth

• More balanced activity between buyers and sellers

• Ongoing migration supporting demand

• A continued preference for move-in-ready homes

• Increased competition from new construction communities

Economic shifts are changing buyer behavior — but Phoenix’s overall market fundamentals remain strong.