Greater Phoenix Real Estate Market Report: Fall 2026 Sales Trends, Mortgage Rates, and Affordability

With Rates Up and Activity Down, Homebuyers Hold a Strong Hand

The short story in Greater Phoenix residential is that there are lots of nerves in a difficult marketplace, with activity down and interest rates, price reductions, and cancellations ticking up. The assumption in early September was that the Federal Reserve was going to raise rates, so that had been baked into the numbers that we were already seeing in higher mortgages. During the final week of last month, the 30-year mortgage average crossed above 7.5% for the first time since November 2023. In addition to another potential Fed increase later this year, the 10-year Treasury—one of the key inputs for mortgage rates—are in a range above 5.2% for the first time in 20-plus years. Even with many positive economic indicators, including steady employment numbers, the Federal Reserve is focusing monetary policy on curbing inflation.

With supply up and demand down, it’s continuing to be a textbook buyer’s market: The slowdown has delivered a broader range of appealing available properties and additional negotiability. Particularly under $1 million, there is very little activity. Strategic homebuyers making cash offers have a stronger hand than they have had in the several years—and with another rate increase likely, the timing could be in their favor. Meanwhile, sellers need to be priced right, with their property in the best possible condition, to attract buyer attention and offers. When it comes time for inspection or if issues arise, the default should be to problem-solving mode, not attempting to play hardball.

By the Numbers: Greater Phoenix Residential Market

New listings in August totaled 7,709 in the Arizona Regional MLS, down 1.3% from last August’s count of 7,814. September has followed the same pattern, down about 1.3% from last year. That puts the third quarter down just 0.3%, while the overall listing count as of week 39 was up 3.5% from last year. 

• Good news for first-time homebuyers: Inventory is up significantly in the most affordable price ranges, as higher mortgage rates knock out other competing buyers. 
• The shock and awe of mortgage rate increases also spurred a wave of price reductions mid-September, pushing asking prices down 2.2% in the $300-400K price range. At 7.5%, average conventional mortgage rates have now increased more than a half point since the beginning of September. That’s an increase of roughly 5% on a quoted principal and interest payment. A decline of 2.2% in asking price is a 2.2% decline in payment if the buyer drops their loan amount by the same percentage. This means that sellers of affordable homes under $400K are willing to meet the buyers nearly halfway. 
• Active listings have climbed off their summer low point, and supply is now rising faster than last year. Retirement communities still hold the top three spots for seller’s markets—Anthem, Sun City West, and Sun Lakes—but luxury markets are cooling quickly. Paradise Valley has slipped from the #1 seller’s market to #5 over the past month, and Fountain Hills from #3 to #6. Expect this shift to continue into October as new listings increase and higher mortgage rates weigh on demand.

Home Sales and Contract Activity Both Down in Greater Phoenix

August sales closed at 5,057, down 6.3% from last August, as the low contract activity after the 4th of July fed through to closings. September held up, running about 1.7% ahead of last year by the end of the month, but listings under contract were around 9.6% below last year. 

• This indicates that October closings will come up short in year over year comparisons, and the third quarter is down 5.5% so far. The buyers’ shock and awe, caused by the most recent spike in the average mortgage rate to 7.5%, has caused contract activity under $800K to plummet below last year and track with 2023. Ironically, in 2023 mortgage rates also spiked from 7% to 7.5% in September, so buyer activity may not be as unpredictable as it might seem. By October 2023 rates peaked at 8%, but they were back to 6.6% by the end of the year, allowing many of those loans to be refinanced and payments to be reduced by 10% or more. The 7% rate isn’t new. In fact, it remained between 7-7.5% in the first half of 2024 and buyer demand was similar to the first half of 2025, despite lower rates at that time. 
• Bottom line: Buyers who can shoulder the rate today will enjoy more choice and less competition in these conditions. 

The release for Greater Phoenix median family income measures from the Census has been delayed, but average hourly earnings from the Bureau of Labor Statistics measured $38.11 for August. Assuming 40-hour work weeks and 52 weeks paid per year, that equates to roughly $79,000/year. That is a 9.5% increase from August 2024, outpacing the 3.9% rate of inflation for Greater Phoenix over the same time span. This means that although home appreciation is flat, homes have become more affordable when adjusted for inflation and income over the past 2 years.

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