Real Estate Update October 1, 2025

The Arizona housing market feels like it’s moving through thick desert air. Some parts slow, some push forward, others stall. Across the nation, buyers gained the upper hand this summer, but here in "The Valley," the picture is more complicated. Luxury homes hold their ground while the rest of the market slips sideways.

Quick Points

• National home prices cooled in summer 2025

• Phoenix resale prices edged down slightly

• Luxury homes show steadier strength than entry-level

• Builders use incentives to move inventory

• More listings in Phoenix boost buyer leverage

Also Read: Greater Phoenix Housing Market Trends – Late September 2025

National Prices Shift Lower

U.S. housing prices are moving slower than inflation, which puts more pressure on sellers. July’s national price growth was 1.7% compared to a 2.7% rise in consumer costs. That gap matters. It means homes aren’t keeping pace with the broader economy. By August, the market tilted hard toward buyers. Supply outpaced demand by more than half a million listings, the widest margin in over a decade.

• National home prices up 1.7% year-over-year in July

• Median U.S. home price in August: $460,000

• Inventory: 862,000 active listings nationwide

• Days on market: 43 days

• About 42% of sellers cut prices recently

The cooling trend looks broad. And with fewer buyers in the hunt, sellers must adjust quickly or watch homes sit.

Greater Phoenix Market Cools With A Split

Greater Phoenix is following the national pattern, though with sharper edges. Case-Shiller data showed a 0.9% drop in annual home prices this summer. By August, the median sale price was $445,000, slightly weaker than last year. More homes hit the market too, giving buyers more room to push.

• Median resale price: $436,500 in August

• Active listings up 17% year-over-year

• Market Action Index dropped to 33.9

• Cromford Market Index at 81.5, firmly buyer-leaning

But don’t count all sellers out. Homes in top shape & priced well still move fast, while fixer-uppers linger. That split is becoming the hallmark of the Valley of the Sun.

New Construction Under Pressure

Builders in Greater Phoenix face an uphill battle. Demand slowed while supply costs remained sticky. Many have shifted focus to moving standing inventory, piling on incentives that pull in cautious buyers. Mortgage buydowns are front & center, sometimes offering 30-year loans below 4%.

• New home median price: $499,990 in August

• Up 6.03% from last year

• 1,916 homes closed, down 4.8% year-over-year

• Builder incentives near 15-year highs

• National permits down 11.1% year-over-year

The message is clear: builders would rather sell at slimmer margins than sit on empty homes.

Luxury Holds Firm

High-end homes in the local market tell a different story. Yes, absorption rates slipped, but luxury still outpaces much of the broader market. Buyers in this tier often move with less urgency, yet strong equity & lifestyle demand keep activity alive.

• Luxury absorption rate: 7.8%

• Entry-level absorption: 11.2%

• Homes in good condition still competitive

• Big land deals signal faith in future demand

Hovnanian’s $71.1 million buy in Desert Ridge underscores that developers still see long-term strength, especially in the higher brackets. Luxury isn’t immune, but it’s steadier than the rest.

Also Read: New Builds Drop And Rentals Surge In Greater Phoenix Market

Rates & Sentiment

Mortgage rates keep bouncing, and that volatility weighs on confidence. After dipping to 6.13%, rates ticked back up to 6.37% last week. Builders remain cautious, eyeing bond markets more than Fed moves to guess what’s next. Sentiment has weakened, but not collapsed.

• Mortgage rates at 6.37%

• Single-family starts down 11.7% year-over-year

• Supply measured at 97, just below normal

• Demand stuck at 79.5, about 20% off average

With fewer buyers & higher borrowing costs, momentum favors patience. But with rates moving fast, timing matters more than ever.

The bottom line? The Greater Phoenix market feels choppy. Buyers have leverage, but sellers still hold cards if they price right. The luxury tier stands as a relative stronghold, with steady demand & fresh land bets signaling faith in the future. The rest of "The Valley" leans buyer-friendly, making October a month where sharp pricing & condition could mean everything.

FAQ

Is the Greater Phoenix housing market still cooling?

Yes. Prices slipped 0.9% year-over-year this summer, and listings climbed 17%. That puts more leverage in buyers’ hands.

Are national home prices falling too?

They’re still rising, but slowly. July showed a 1.7% increase, which trails inflation. That means real values are slipping.

What’s happening with luxury homes?

Luxury in "The Valley" remains steady. Absorption slowed, but high-end buyers still show up, and land deals like Hovnanian’s Desert Ridge purchase point to long-term confidence.

How are builders reacting to slower demand?

Builders are leaning on incentives. Mortgage buydowns under 4% and other perks are common as they work through spec homes.

What’s the latest on mortgage rates?

Rates bounced back to 6.37% after dipping to 6.13%. Movement is tied more to bond markets than direct Fed cuts.

Are well-kept homes still selling fast?

Yes. Homes priced right & in good condition still draw quick offers. Outdated or overpriced ones tend to linger.

Is this a buyer’s market now?

For the entire valley as a whole, the Cromford Index sits at 81.5. Anything under 90 signals a buyer’s edge, so yes, buyers have the upper hand.

Also Read: Real Estate Listing Inventory Drops Sharply Across The Valley