It’s All About the Neighborhood

December 11, 2025

Although it is convenient shorthand to use terms such as buyer’s market and seller’s market, those broad characterizations of Greater Phoenix cities do not always capture what is happening in specific neighborhoods. Those nearby pockets, no more than a couple of streets over, are what matter most to you as a buyer or seller. Even in high-performing communities, some pockets are performing better than others. It all comes down to basic economics: Inventory is competition. If demand is constant or increasing slightly, but there is a lot of inventory building up in a given neighborhood, that will dampen pricing and impact negotiability.

October and November are traditionally the big months for relisting luxury properties, trying to attract the attention of winter visitors. One of the unknowns for this winter, both within luxury and other price points, is the decrease in the number of Canadian snowbirds and therefore potential homebuyers. Between tariffs and trade issues, political tensions, and the weak Canadian dollar, our northern neighbors are reducing the amount of travel to the US in general and Arizona in particular by an estimated 20-30% vs. 2024.

From October to November 2025, the supply-demand index increased from 78.8 to 79.2, with both the individual supply and demand indexes rising slightly. As anticipated, the Federal Reserve dropped the Fed Funds Rate by 0.25 at their meeting on October 29. They also announced they would end the reduction of their securities holdings on December 1, which could further stabilize mortgage rates.

While the government shutdown has ended, the Federal Reserve is still lacking specific reports for October regarding jobs and inflation. As a result, they are not promising further rate cuts at their next meeting on December 10—although some economists are now projecting another 0.25 reduction. Mortgage rates remain between 6.1-6.3%, which is only the third time in the past 3 years that rates have dropped to the low 6% range. However, in the past they haven’t stayed there for long. This time it has lasted for nearly 3 months, providing a needed demand boost for Q4.

Active Listings Up in October, Down in November

Supply has started to decline as it typically does this time of year. November is drastically lower in new listings from October due to fewer days in the month plus the Thanksgiving holiday. December is typically even lower than November due to two major holidays.

New listings in October came in hotter than the past 3 years, up 5.2% over last October. November new listings towards the end of the month were down 7.7% from last year, bringing new listings added in Q4 so far to 14,614, nearly identical to the 14,610 during the same time frame last year.
Listing cancellations are also up again for the second time this year, which can cause supply to drop in the absence of corresponding new listings. Spikes in both cancellations and expired listings occurred from May-July earlier this year, then declined back to normal. During November, cancellations showed another spike in the $800K-$2M price range and the $300K-$400K range.
The biggest increase in supply continues to be under $300K, up 39% and 42% for condos/townhomes, 39% for manufactured/pre-fab homes, and 19% for single family homes. Within the first-time homebuyer price range, $300K-$400K supply is up 15% (composed of 75% single family, 21% condos/townhomes, and 4% manufactured/pre-fab homes).
For those looking for single-family homes below $400K, 38% are in Pinal County, with a concentration in the city of Maricopa. Another 38% are in the West Valley cities, with density in Surprise and Buckeye.

Trends Could Bode Well for December

Closed sales in October were up 3.5% over last year, equating to an extra 187 closings or +8.5 closings per day. However, closings between $300K-$600K were down 2.6%, which could have been due to a few delayed closings involving government loans during the federal shutdown. In contrast, November came out strong: up 8.8% by the later part of the month, equating to an extra 300 closings, or +21.4 closings per day.

Pending contracts in escrow are also up 9% over last year and both October and November outperformed the past 3 years for Q4 contract activity, appearing to be on the rise during a time when contract activity has declined in the past. This bodes well for December closings.
Demand under $300K continues to surge, with contracts in escrow up 26% over last year and closings up 28% as of late November. Also surging is the $1M-$2M price range, up 22% in escrows, and up 7% in sales. The $600K-$800K range came in third, with a 15% increase in contracts and a 15% increase in sales.
While these were the outliers, all other price ranges were up mildly or just about even with last year. The median sales price is measuring a flat annual appreciation of just 0.3% from last year, with most price ranges within 1% on a per-square-foot basis. First-time homebuyer price ranges below $400K are down 3.1%, while prices over $2M are up 2.8%.

If mortgage rates remain low into 2026—with heightened expectations for a Fed Funds decrease on Dec. 10—demand in Q1 2026 should fare better than 2025, when mortgage rates peaked at 7.25% in January and remained over 6.6% for more than half of the year. While Q1 looks positive for buyer activity, it remains to be seen if it will be enough to push the market back to balance.