Phoenix Real Estate: 2026 First Quarter Market Update

By Arizona Home Group

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As we head into the peak spring season, the window of opportunity is shifting for buyers and sellers, depending on which side of the valley you call home.

We are officially through the first quarter of 2026, and we’ve seen a surprisingly strong start to the year. As we move out of winter and into the spring season, activity is picking up just like we see every year.

Housing market overview. Currently, we have 9,029 pending homes. That is about 8% higher than where we were last year at this time and represents our best start since 2023.

A big reason for this boost is interest rates. We have seen rates trending downward since around September of last year, which has definitely helped bring buyers back into the market.

These lower rates have gotten a lot of buyers off the fence. Because of that, we saw a slight dip in inventory over the past four weeks. Even so, we are still sitting at about a five-month supply of homes, which is quite a lot. In a balanced market, we typically see about two and a half months of supply.

Pending ratio. This is the number of homes under contract compared to active listings. In a balanced market, we would expect that number to be between 35% and 39%. Right now, we are sitting closer to 18%. So, even with the strong activity we’ve seen, the market is still leaning towards a buyer’s market overall.

However, it is important to remember that the Phoenix metro area is made up of 18 major cities, and they aren’t all behaving the same way. Of those 18 cities:

• 12 are technically in a seller’s market: This is led by Chandler, which has the lowest inventory right now.
• 6 are in a buyer’s market: This is led by Buckeye, where there is a much higher supply of homes.

Most of those buyer-leading areas are on the outskirts, in places like Maricopa, Queen Creek, San Tan Valley, Goodyear, and Surprise. These areas tend to have more entry-level pricing, where buyers are most impacted by interest rates. As a result, we are seeing the biggest price reductions in that under $500,000 range.

Entry-level homes vs. luxury homes. While the entry-level market is feeling the pressure of rates, the ultra-luxury segment is on fire. Over the last four years, Phoenix averaged about 28 sales per year for homes priced at $10 million or more.

In just the first three months of 2026, we have already seen 21 of those sales. This massive activity at the top end is why the median home price for the whole area remains so high, even if the average home is sitting on the market longer.

To summarize, the market overall is still a bit lackluster with that 18% pending ratio. Inventory is currently at around 24,000 homes, which is roughly 6,000 to 7,000 more than what we would consider normal. Even with pending activity up, it is not quite enough to fully absorb the number of homes on the market.

Despite the slower activity, home prices are holding up well. We have only lost about 8% of value off the peak from 2022, which is remarkable considering everything this market has been through. We are watching interest rates closely, as they have recently started to kick back up. With inflation still a concern, it is hard to say if we will see meaningful rate relief soon.

If you’re thinking about buying or selling, or just want to understand what these numbers mean for you, reach out to us anytime at (602) 571-3730 or AHGadmin@gmail.com. We’re always here to help.