As of May 8, 2025, the Phoenix, AZ real estate market is undergoing a significant shift, transitioning from a seller’s market to a more buyer-friendly landscape. If you are looking to buy, be sure the property is inspected.
Here’s a detailed breakdown based on the latest available data:
Market Dynamics and Pricing Trends
The Phoenix housing market is currently described as "somewhat competitive," scoring 53 out of 100 on Redfin’s competitiveness index. The median sale price for homes in February 2025 was $470,000, reflecting a modest 3.5% year-over-year increase. However, this growth is slower than in previous years, and some sources report a decline, with average home values dropping 8.5% over the past year to $415,258, according to Zillow data from November 2024. Analyst Nick Gerli from Reventure App noted a 6.9% price drop from the June 2022 peak, warning of a potential 20% correction if inventory continues to rise and sales remain muted. This price correction follows a pandemic-era boom, where prices surged 53% in Phoenix between February 2020 and February 2025, outpacing the national average of 45%.
Inventory and Supply
Inventory levels have spiked dramatically, with over 27,000 homes for sale in Arizona as of May 1, 2025, a level not seen in nearly a decade, according to Valley realtor Jeff Sibbach. In Phoenix specifically, active listings reached 18,700 in April 2025, a 467% increase from the pandemic low three years prior, as reported on X. Rocket Homes data shows 5,916 homes for sale in April 2025, a 5.8% increase from March, with a median price of $457,998, up 3.1% year-over-year. This surge in supply has led to a more balanced market, with a 3.7-month inventory at the end of 2024, giving buyers more choices and negotiation power.
Sales and Market Activity
Homes are taking longer to sell, with an average of 67 days on the market in April 2025, up 18.6% from the previous year. In February 2025, 1,336 homes were sold, a slight increase from 1,238 the prior year, but 59.5% of homes sold below asking price, indicating buyer leverage. The market has seen a slowdown in demand, partly due to high mortgage rates—around 6.5% to 7% for a 30-year fixed loan in early 2025—which have priced out many first-time buyers, pushing them toward renting.
Rental Market
The rental market remains robust, driven by high home prices and elevated mortgage rates. Average rent in Phoenix as of Q1 2025 is $1,646 per month, up 1.2% year-over-year, yet below the national average of $1,980, making it attractive for renters. However, a 9% decrease in median rent compared to the national average, and an 8% drop over the past year, suggest softening in this sector as well.
Economic and Demographic Factors
Phoenix continues to attract residents due to its affordability compared to coastal metros, a strong job market, and population growth. The Phoenix MSA, with over 5 million people, remains one of the fastest-growing regions in the U.S., driven by industries like technology, healthcare, and manufacturing. However, challenges like water scarcity and rising climate risks (e.g., extreme heat, wildfires) may impact long-term desirability and property values in certain areas.
Market Sentiment and Risks
Sentiment is mixed. Some experts, like those from Arizona REALTORS®, predict increased transactions in 2025 due to pent-up demand, while others, including Gerli, warn of a potential crash, citing a “mass sell-off” by pandemic investors and snowbirds. Posts on X reflect growing concern, with some users describing the market as “done” and pointing to foreclosures, such as a Laveen home dropping from $431,000 in 2022 to an estimated $289,500 in 2025. High inventory and softening demand could lead to further price declines, though the market’s long-term fundamentals remain strong.
