Phoenix home prices poised to drop as inventory surges, analysts say

By Angela Gonzales

Home prices in metro Phoenix are expected to drop within the next three to six months, according to local analysts.

Tina Tamboer, senior analyst for The Cromford Report, said the biggest housing story within the next six months will be the decline in year-over-year home sales prices.

While it's been a buyer's market in the metro since last November, the window is only going to last so long, she said.

“You can’t have the bottom of the lowest possible price and a buyer’s market. You get one or the other. Because by the time the bottom of the market emerges, everybody knows about it," Tamboer said. "You end up with everybody competing with you on getting that perfect home at the perfect price. Guess what: prices start going up again.”

Connor Devereux, director of market analytics for CoStar Group/Homes.com, also has seen evidence that Phoenix is shifting toward a more buyer-friendly housing market.

The for-sale home inventory in Phoenix is climbing quickly, up 27% year-over-year to 24,300 listings in July 2025, he said.

"That marked the largest number of active listings for the month of July in over a decade and was nearly double the level seen in July 2023," Devereux said.

Camelback East, Buckeye, Surprise see inventory gains

For-sale inventory rose the quickest in Camelback East Village, an area of central Phoenix that includes Arcadia, Arcadia Lite and parts of the SR-51 corridor, he said.

Following behind that area were Buckeye and Surprise, which saw the number of for-sale homes increase by 140 or more compared to a year ago.

The West Valley boasts some housing hot spots where first-time homebuyers can find homes for under $400,000.

The increased supply of available homes provides potential buyers in metro Phoenix with more options and negotiating power, Devereux said.

The median sale price of Phoenix homes was up 1.4% annually in July to $448,000, according to Homes.com data. That is still lower than median home prices of $455,000 in December 2024.

"That rate of growth lags both the overall U.S. and CPI inflation," Devereux said. "Home prices are now below the level seen entering the year, and Phoenix could remain an under performer over the near term."

According to the S&P Cotality Case-Shiller Indices released on Aug. 26, metro Phoenix showed a barely noticeable 0.06% drop in home prices in June.

Other high-growth Sun Belt markets in Texas and Florida already are contending with a sustained softening in home prices, Devereaux said, and Phoenix could be in the early stages of a similar trend.

This market shift comes at a time when mortgage rates are hovering around 6.58% and homebuilders continue to offer incentives, such as rate buy-downs to help bring down the overall costs of a home.

But homebuilders will only offer these incentives for so long.

When mortgage interest rates drop below 6%, those rate buy-down incentives will disappear, said Charley Freericks, president of the Arizona region for Howard Hughes Holdings Inc. (NYSE: HHH), which is headquartered in the Houston area.

Freericks, who is planning a November grand opening of the first village of the 37,000-acre Teravalis master-planned community in Buckeye, said homebuilders are looking forward to ending the rate-buy down incentive, which will allow them to sell at better margins.

All of this points to a window for the homebuyer that will be closing soon.

"If we go into a balanced market in the next few months, the first thing to go away are those incentives," Tamboer said.

Final Thoughts:

The Phoenix housing market is shifting quickly. Inventory has surged to levels not seen in over a decade, creating rare opportunities for buyers with more choices and stronger negotiating power. However, this window won’t last forever.

Analysts warn that as soon as the market bottoms out and interest rates begin to ease, competition will return, prices will rebound, and builder incentives will disappear. For buyers, the next 3–6 months could be the best time to secure a home in metro Phoenix before conditions tighten again.