Spring marks the peak home-buying season in Greater Phoenix, with March being the second most popular month for new listings. Despite being up 14% from last year, inventory remains 31% below normal, although the current 16,886 active listings provide more options compared to two years ago. Higher mortgage rates have kept buyer competition lower than usual, but even slight declines in rates have boosted weekly accepted contracts. While some closings occur over asking price, the majority are negotiated down by an average of 2.1% below list. Builders have increased single-family home permits over the past seven months, with 73% of new home sales involving builder incentives, often reducing mortgage rates and monthly payments. Despite median sales prices remaining relatively stagnant for ten months, affordability may improve as incomes catch up to prices, especially with an expected mild decline in rates.
For sellers, buyer activity approaches its peak from April through May. Some areas and price points have seen increased demand compared to last year, but limited supply is a crucial factor. While certain areas like Black Canyon City and Carefree/Cave Creek have seen increased contract activity, they may not feel particularly hot due to ample competing inventory. The hottest areas with insufficient supply include Avondale, Tolleson, South Phoenix, Ahwatukee, Chandler, Gilbert, and San Tan Valley, where reasonably-priced sellers are selling homes 1-2 weeks faster than the current median time frame of 4 weeks.
RELATED NEWS: Mortgage Rates Rise Again
On both sides of the equation, mortgage rates continue to be a major sticking point, and uncertainty about the future of rates have left many buyers and sellers on the sidelines. However, modest increases in inventory have created opportunities for those who are not constrained by interest rates. Only time will tell if rates will decrease and bring more buyers and sellers to the market.
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