2025 Housing Trends In AZ

Arizona’s housing engine is slowing down, and the numbers prove it. Builders are pulling fewer permits, developers are hitting roadblocks, & policymakers are debating how to fix it. Yet, prices have barely budged, and that’s what makes this year unusual.

Quick Points

• Housing permits down 12% statewide in 2025

• Multi-family permits dropped 30%

• Median home price near $447K

• Fed rate cuts may help buyers

• Construction stalls in parts of “The Valley”

Also Read: Wealth Gap Widens As Luxury Housing Market Climbs Higher

Permits Stumble Across The State

Housing construction is pumping the brakes. Arizona is issuing new permits at the slowest clip since 2019. Over the last year, roughly 36,455 single-family permits were approved, a 12% drop. Developers filed just 14,582 multi-family permits, down more than 30%.

• Statewide permits fell 12% year-over-year

• On track for under 52,000 new housing units

• Multi-family declines hit urban centers hardest

• Permit levels still exceed post-Recession years

• Builders cite costs, policy, and labor as key drags

Despite the slump, activity remains stronger than during the early 2010s. Back then, the market was crawling out of the Great Recession. Now, the slowdown feels more like a pause, not a crash.

Home Prices Hold Steady

While construction cools, prices haven’t blinked. The median Arizona home sold for $447,000 in September 2025, nearly the same as last year’s $441,000. Over three years, prices have hovered just below half a million dollars.

• Up 7% since 2022

• Modest year-over-year increase

• Demand still outweighs supply

• Buyers hesitate, but sellers don’t cut much

The takeaway: even as fewer homes are built, prices aren’t falling. That’s the tightrope Arizona walks, a softer construction market tied to a stubbornly expensive resale market.

Also Read: Reasons Why Fix And Flips Are Cooling In The Housing Market

Economic Moves & Policy Pullbacks

The Federal Reserve’s recent rate cuts, two in as many months, could stir up activity again. Mortgage rates may ease a bit, giving buyers some breathing room. But one big state policy shift might offset those gains.

• Fed rate now near 3.9%

• Lower borrowing costs may lift demand

• Arizona ended its Low-Income Housing Tax Credit program

• Affordable development projects hit hardest in rural areas

Without the tax credit, many smaller towns could lose projects that kept local housing within reach. It’s a blow for builders who relied on those incentives to make deals pencil out.

Local Tension Over Water, Permitting, & Development

In “The Valley,” the slowdown isn’t just about interest rates. It’s also about water. Some developments have been frozen until builders can prove a 100-year groundwater supply. That rule is now the center of a lawsuit filed by the Home Builders Association of Central Arizona.

• Lawsuit targets state groundwater rules

• Cities blame state, federal, and county review delays

• Failed bill sought faster permitting

• Local leaders fear investor-driven buying

Senate Bill 1229, called the Arizona Starter Homes Act, tried to cut red tape by loosening design rules. Cities pushed back, saying it would open the door for corporate investors to scoop up entry-level homes.

The tug-of-war between state oversight, local control, and environmental limits has become the new fault line shaping Arizona’s housing future.

Also Read: Scottsdale Outsells The Entire Phoenix RE Market For First Time