Arizona Real Estate Market Summary – February 2025

Arizona Real Estate Market Summary – February 2025

The Arizona housing market continues to shift in favor of buyers, though the pace of this transition has slowed slightly. Fifteen out of seventeen major cities saw declining conditions for sellers, with only Goodyear and Cave Creek showing improvement. The average Cromford Market Index (CMI) dropped by 5.2%, but this is a slower decline than in previous weeks, likely due to a slight dip in mortgage rates.

Fastest Declining Markets:

• Tempe (-11%), Peoria (-10%), Chandler (-10%)
• Overall, declines were milder than last week.

Market Breakdown:

• 8 cities remain seller’s markets
• 4 cities are balanced
• 5 cities favor buyers
• Active listings are increasing but at a slower rate (1.4% growth this past week)

Luxury Market Outpacing the Rest

The super-luxury market in Paradise Valley, Scottsdale, and North Phoenix is performing significantly better than the rest of the market.

• Sales in ZIP codes 85253, 85255, and 85262 increased by 12.3%
• Median sale price jumped 34.2% to $2.015 million
• Total dollar volume surged 51.2%

By contrast, Pinal County saw fewer sales (-3.4%), but median prices increased slightly by 1.8%, and the average price per square foot rose by 4.4%. The market remains slow-moving but stable, with a large supply and modest demand.

Home Price Trends

The latest Case-Shiller Index shows that Phoenix home prices decreased slightly (-0.06%) last month but are up 2.1% year-over-year. This growth is half the national average (+4.5%), putting Phoenix in 17th place out of 20 major cities. Tampa (-1.1%) is the only city with negative annual growth.

Affordability & Financing Trends

• New home sales have softened as mortgage rate buy-down incentives become less competitive.
• Existing home sellers can now offer similar financing perks, leveling the playing field.
• Price reductions are up 52% from last year, reflecting increased seller flexibility.

Foreclosures on the Rise, But Not a Crisis

Foreclosure activity has tripled since last year, but it remains well below historical norms.

• 381 residential foreclosure filings in January (normal level is 1,846).
• 63 completed foreclosures, still far below peaks seen in 2010.

Key Takeaways

• Buyers have more negotiating power than before, but the rate of change is slowing.
• Luxury real estate is booming, while mid-range and affordable segments struggle.
• Phoenix’s home price growth is below national trends, but still positive.
• Financing incentives are critical, as affordability remains a challenge.
• Foreclosures are rising, but not to concerning levels.

While the market is shifting, it's clear that Arizona real estate is experiencing a tale of two markets—strong demand for luxury homes, while mid-range and entry-level housing face increasing pressure.