By Madelaine Braggs | Rose Law Group Reporter
The Phoenix housing market is doing almost everything right—and still struggling to move buyers off the sidelines.
That paradox defined the housing discussion led by Zonda Chief Economist Ali Wolf, beginning with a stark national context. “Nationally, existing home sales are at their lowest level in 30 years,” Wolf said. “New home sales are at their lowest level in three.” Phoenix, while more resilient than many markets, is not immune: year-over-year sales are down, even as inventory rises and incentives deepen.
Including Phoenix, roughly 75% of top markets now have more inventory than they did in 2019. Phoenix stands out for its unusually high share of quick move-in homes—spec properties available within 90 days. “Phoenix is leading the country in QMIs,” Wolf said, “and not necessarily in a good way.” While supply is finally rolling in the direction builders hoped for, demand has not followed. Since June, Phoenix’s new home sales rate has hovered around 2.3% to 2.4%, softer than expected given the volume of available homes.
Builders have responded aggressively. Incentives now represent roughly 10% of local home prices, with mortgage rate buydowns, financing assistance, and design upgrades becoming standard. “Builders are rolling out the red carpet,” Wolf said. “Consumers just aren’t responding the way we hoped.” The result is a market with more choice, slower absorption, and diminishing returns on incentives.
Phoenix’s affordability problem isn’t uniform—it shifts sharply by price point. Wolf described steep drop-offs between the $400,000 and $700,000 range, with even more pronounced cliffs at higher incomes. Homes within master-planned communities continue to outperform, selling 16% faster, and Phoenix now ranks third nationally as a master-planned market. But speed alone hasn’t been enough to reset buyer psychology.
Demographics help explain why. Millennials—now nearly 30% of Phoenix’s population—are the largest and most consequential group. Half already own homes and are shopping for second or move-up purchases, seeking turnkey homes with good schools and amenities. The other half are renters—and in Phoenix, “there’s not much incentive for a renter to move out and buy a home,” Wolf said bluntly. Rent-versus-own math remains unfavorable, especially with economic uncertainty and AI-driven job anxiety weighing on confidence.
Baby boomers, who make up 19% of Phoenix residents, are the wealthiest generation by far and are drawn to the region’s weather, taxes, and lifestyle. Yet many are discretionary movers. “They don’t have to move,” Wolf said. “They’re more sensitive to the news and to market volatility.” Gen X households, often sitting on significant equity, face similar inertia—many still hold low-rate mortgages and need buydowns or quality upgrades to justify moving.
The underlying issue, Wolf emphasized, is not supply. It’s confidence. Consumer confidence today is worse than it was at the bottom of the financial crisis. Despite mortgage rates drifting into the low 6% range—down from 6.7% a year earlier—lower rates alone haven’t changed behavior. “If someone could afford a $500,000 home at 7% last spring,” Wolf explained, “they could afford about $550,000 today. But they still need a reason to buy.”
Senior Vice President of the mortgage division at Zonda, Nicolette Chapman, reinforced that view, noting that while mortgage spreads have nearly normalized after two years of dysfunction, purchase applications remain volatile. Refinance activity is up sharply year over year, but still well below pre-2022 norms. “Affordability and lack of consumer confidence remain the biggest challenge,” she said.
Phoenix continues to outperform many national metrics—it ranks #8 among Zonda’s Top Employment Markets to Watch, maintains strong long-term population growth, and leads the nation in new home sales pace. But incentives alone have failed to unlock demand. Builders are selling more homes than they’re starting, attached housing is gaining modest traction, and price-per-square-foot is easing. Still, buyers hesitate.
The conclusion emerging from the data—and from the room—was clear. No combination of incentives, demographics, or product shifts will fully restore housing demand without meaningful action on interest rates. Until policy delivers sustained rate relief and labor-market stability, Phoenix’s housing market will remain well-built, well-supplied—and fundamentally stuck.
