Phoenix Housing Market 2025 Recap and What 2026 May Bring

By Arizona Home Group

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What actually happened in the Phoenix housing market in 2025, and what does it mean for 2026? If you’re trying to make sense of what’s next, you’re not alone. After a few volatile years, many buyers, sellers, and investors are wondering if we’ve hit a turning point or if more turbulence lies ahead.

Let’s take a closer look at how 2025 really unfolded in Phoenix real estate—and what those trends suggest for 2026.

2025 housing market recap. For the past few years, the market has felt slow, and 2025 was no exception. Higher mortgage rates kept activity muted, even though conditions improved slightly compared to 2024, which was the slowest year for closed sales since 2008.

In 2025, just over 69,000 homes closed, a modest bump from the prior two years but still well below what Phoenix saw during peak demand.

One reason for that small improvement was mortgage rates. The 30-year fixed drifted down from around 7% at the start of 2025 to roughly 6.25% by year’s end. That helped some buyers reenter the market, but affordability remains the biggest challenge, especially for entry-level buyers under $500,000.

Homebuyer concerns. For those looking to buy a home under $500,000, the current housing costs are daunting. Even with lower interest rates, getting a mortgage remains challenging. Buyers in entry-level brackets really feel the pinch.

Challenge for home sellers. Many homeowners are locked into rates between 2.5% and 4% and simply do not want to give those up. As a result, more sellers listed their homes in early 2025, then pulled them off the market when they did not get the results they expected. Inventory is up about 10 percent year over year, but that number was much higher last spring before many sellers gave up.

Market activity. Activity is slightly better than last year, but not by much. Pricing, however, has been surprisingly steady. Entry-level home prices are sitting around $415,000, nearly identical to where they were at the start of 2025, despite higher inventory and rate fluctuations.

Looking ahead to 2026, expectations are fairly realistic. Unless interest rates drop meaningfully, the market may look a lot like 2025. Even the Federal Reserve has acknowledged that small rate cuts are unlikely to dramatically change housing activity.

Still, with prices only down about 7.5% over the past three years, Phoenix has remained more resilient than many expected.

While the housing market in Phoenix has its challenges, there’s still room for optimism. Whether you’re a buyer or a seller, understanding these dynamics can help you make informed decisions.

If you have questions or are considering entering this market, don’t hesitate to reach out at (602) 571-3730 or AHGadmin@gmail.com. We’re happy to help.