Housing Market Trends At The Start Of 2025

The real estate market wrapped up 2024 with some surprising developments, leaving buyers and sellers in Greater Phoenix wondering what’s on the horizon. From a surge in unsold listings to the lowest contract ratios since 2009, the market is shifting. Let’s go over what’s happening as 2025 kicks off.

End Of Year Expired Listings Surge

As 2024 ended, an unusually large number of listings expired, signaling a challenging environment for sellers. While a slowdown is typical during the holidays, this year’s figures were anything but ordinary.

• Nearly double the expired listings compared to 2023.
• Many agreements ended on December 31, a common contract expiration date.
• Over 900 listings expired in Greater Phoenix alone.
• Some sellers opted out of renewing contracts after sluggish sales activity.

The big question: will these homes come back on the market in January, or are they gone for good? With sellers hesitant to continue listing, supply could remain tight, shaping the spring market ahead.

Also Read: Arizona Real Estate Market Statistics Compared To Other States

Housing Supply Reaches 4-Year Highs

Across the country, housing supply climbed to levels not seen since 2020, with Greater Phoenix showing similar patterns. Rising inventory reflects slower buyer demand, but not all trends are negative.

• Active listings rose 5% month-over-month in November.
• A 12.1% year-over-year inventory increase, showing slower sales.
• Over half of all homes sat unsold for 60+ days, the highest share since 2019.
• Greater Phoenix Q4 average days on market hit 73, well above national averages.

While longer listing times feel like a setback, they signal a return to pre-pandemic norms. Buyers have more options and time, while sellers must adjust expectations for a slower, steadier market.

Mortgage Rates & What They Mean For Buyers

Mortgage rates remain a significant hurdle for buyers, staying above 7% as the new year begins. However, there are ways to navigate these challenges.

• Rates started 2025 at 7.11%, up from December lows.
• Economic surprises such as a weaker jobs report could cause rates to drop.
• Buyers can consider assumable mortgages to lock in older, lower rates.
• Stay connected with lenders for potential opportunities.

With shifting economic conditions, mortgage rates could improve. Meanwhile, creative solutions like assumable loans can help buyers secure homes without waiting for major market changes.

Contract Ratios Plunge To 2009 Lows

The contract ratio, which measures market activity, is at its lowest point in over a decade. This reflects a challenging landscape for sellers in Greater Phoenix.

• Current contract ratio: 29.3, the lowest since March 2009.
• Tempe ZIP code 85284 stands out with higher buyer activity.
• Most other ZIP codes remain in balanced or cool territory.

With more homes available than under contract, the market favors buyers. Sellers hoping for quick sales must prepare for increased competition and longer timelines.

Also Read: City Life Or Suburban Bliss? Comparing Phoenix And Its Suburbs

Positive Signs: Affordability Shows Slight Improvement

Not all the trends are discouraging. Housing affordability saw small but meaningful improvements, giving buyers and sellers hope for stabilization in 2025.

• Median housing costs dipped slightly to 41.8% of income.
• Greater Phoenix prices softened since the 2022 peak.
• Affordability could improve further if prices or rates decline.

Although the changes are modest, they indicate movement in a better direction. With the spring market approaching, this could lay the groundwork for more balance between buyers and sellers.

What To Expect For Buyers & Sellers

January will provide crucial insights into the housing market as trends develop. Economic data, mortgage rates, and listing activity will all shape the path forward.

• Sellers in Greater Phoenix should consider spring listings, the busiest time of year.
• Buyers can explore assumable loans to bypass high rates.
• Watch for expired listings. Will they return, or stay off the market?

The market has cooled, but opportunities still exist. Adapting to the new reality will be key for both buyers and sellers in looking for real estate in Arizona. Stay tuned to LUXE BLOG for more market info as the year progresses.