Rates Rise, Activity Slows in Phoenix Residential
Interest and mortgage rates were down slightly towards the end of April, but up, overall, compared to the past few years. This seems to be the major factor holding buyers back as we head into the end of the season—and much like six or seven months ago, owner-occupants are staying put (they can’t afford to move up, down or laterally, if they need financing, with the higher interest rates). Although pricing is decreasing on a per-square-foot basis, it has not been enough to counter the slowing activity levels. Rental rates remain high, which would normally drive more sales, but the hit to discretionary income is making it more difficult to save enough for a downpayment.
Tips for sellers: In addition to being priced properly, sellers need to be prepared financially and mentally to make concessions. Availability is also key, having your property ready to be shown quickly and presented in its best possible light. In the current market, requiring a 24- or 48-hour notice can be enough to send would-be buyers looking elsewhere.
From February to March 2026, the supply-demand index was nearly unchanged, remaining in a slight buyer’s market as it has been since the beginning of March. Supply and demand have cancelled each other out, as they have both risen at roughly the same rate over the past 30 days.
Key economic numbers released in April include the monthly unemployment report on April 3, showing a decline from 4.4% to 4.3%, and the CPI inflation report on April 13, showing a spike from 2.4% to 3.3%. In the past, an inflation spike like that would cause mortgage rates to increase, but average rates had already spiked in March to 6.6% in anticipation of higher inflation and favorable employment numbers, which helped rates drift down by the time the CPI was released. As of the beginning of May, conventional mortgage rates were around 6.3%.
Active Listings Down Overall, Cancellations and Expirations Up
The first quarter ended with 29,949 new listings added to the Arizona Regional MLS, down 2.9% from last year. New listings under $300K were up the most at 9.2%, but those between $300K-$2M were down 4.9%, and over $2M up 2.1%. Fewer new listings, combined with elevated cancelled and expired listings, are contributing to the lack of growth in the overall active listing counts. Cancellations in March increased 30% over February from 1,324 to 1,716, and expired listings increased 35% from 572 to 771.
While the increase in cancelled and expired listings may appear concerning, they are not unusual at the current level of active listings. For instance, in March 2014 the supply count was slightly higher than today with 800 expired and 1,986 cancelled; that housing market was considered balanced. Active supply is just 6.6% above what would be considered normal for the season, which suggests that Phoenix is not experiencing a severe housing shortage at this time; cancelled/expired listings are a way of keeping supply in check.
Supply levels of more affordable homes under $400K are holding up well, with mobile homes just about even with last year, up 0.7%; single-family homes up 4.7%; and condominiums/townhomes up 11%. Median list prices in this segment are down as follows:
- Condominium/townhomes: $339K, down 4.2% from $354K last year
- Smaller units under 1,200 SF: $265K, down 5.4% from $280K last year
- Smaller single-family homes between 1,200-1,500 SF: $375K, down 2.6% from $385K last year
Contract Activity Retracts, Per-Square-Foot Prices Decline Under $400K
First quarter MLS sales came in at 17,113, up 3.4% from last year’s count of 16,545. As of mid-month, April sales counts continued the trend, also up 3.4% as a byproduct of contracts written at the beginning of March when mortgage rates were at 6.1%. Contract activity has retracted over the past 4 weeks, in response to mortgage rate increases to a high of 6.6% in mid-March. Fewer new contracts means fewer escrows in the pipeline scheduled to close over the next 4-6 weeks, which will be reflected in May and June closings.
Meanwhile, prices per square foot for homes under $400K have declined to where they were in mid-2021.
- At the peak of market price in 2022, a budget under $300K bought a median of 1,087 SF. Today it buys 1,186 SF, nearly 100 SF more living space, which is roughly the size of a small bedroom.
- A budget of $300K-$400K bought a median of 1,445 SF in 2022 and today buys 1,546 SF, also roughly an extra 100 SF.
The size of single-family homes has grown significantly in the past 25 years. In 2001, the median-sized home sold in Greater Phoenix was 1,696 SF. In 2026, the median size is now 2,024 SF. That’s an increase of 328 SF, roughly the size of an extra living room. To date in 2026, the median price of a 1,700 SF single-family home is roughly $415K and a 2,000 SF home is $495K.
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