Arizona Real Estate Outlook: Patterns and Predictions for 2025-2026
The Arizona housing market is expected to undergo a period of moderation in 2025-2026, according to various forecasts. This moderation is set to bring about a more balanced market with modest price increases, providing some relief to buyers and stimulating the market.
Statewide Trends
Median home prices are predicted to rise by approximately 3% in 2025 and 4% in 2026 statewide. However, local markets such as Phoenix are forecasted to experience a small decline of around -1.7% from mid-2025 to mid-2026 [1][3][5].
The median sale price in Arizona was $444,500 in June 2025, a 1.3% decrease compared to last year. The sale-to-list price ratio is 97.9%, a 0.3 percentage point decrease year-over-year [6].
Home sales in Arizona increased by 4.3% year-over-year in June 2025, with 8,787 homes sold [7]. Furthermore, the number of homes for sale in Arizona increased by 24.7% year-over-year, with 48,344 homes available [8].
Key Factors
Several factors are influencing this market forecast. Mortgage rates are projected to hold around 6.4% in the second half of 2025, making home financing more expensive and dampening buyer demand [1][3].
Inventory levels are also playing a significant role. Slight increases in housing inventory are providing more options for buyers, reducing the pressure on home prices and bidding intensity [1][5].
Economic conditions, both nationally and in Arizona, are also impacting the market. Broader national economic uncertainty affects buyer confidence and housing demand [1].
Regional dynamics, such as industrial and residential growth in areas like Tucson and Marana, support demand for housing and commercial spaces. However, limited vacant land in some industrial hubs may influence localized market conditions [2].
Market cooling is another key factor. Experts note that markets like Phoenix are experiencing a gradual decline or flattening of prices after years of rapid increases, with homes taking longer to sell [3][4].
Local Factors
Local factors such as job growth in Arizona, new construction, and migration patterns will also play a big role in the future of the Arizona housing market. Phoenix, AZ is the second most popular destination for people moving from other metro areas, with a net inflow of 6,300 between May '25 and Jul '25 [9].
Outlook
While a major crash in the Arizona housing market seems unlikely, as it would require a significant economic downturn or a massive oversupply of homes, neither of which seem likely right now, the market is expected to remain balanced, with more choices for buyers but still solid demand [10].
References
[1] National Association of Realtors (NAR)
[2] Tucson Association of Realtors
[3] Arizona Regional Multiple Listing Service (ARMLS)
[4] Zillow
[5] Freddie Mac
[6] Arizona Regional Multiple Listing Service (ARMLS)
[7] Arizona Regional Multiple Listing Service (ARMLS)
[8] Arizona Regional Multiple Listing Service (ARMLS)
[9] U.S. Census Bureau
[10] Lawrence Yun, Chief Economist for the National Association of Realtors (NAR)
- In contrast to the projected growth in median home prices statewide, local markets such as Phoenix may experience a small decline by the midpoint of 2026.
- Due to the anticipated rise in mortgage rates, home financing is expected to become more expensive, potentially dampening buyer demand in the Arizona real estate market.
- The growth in inventory levels could provide more choices for buyers, reducing the pressure on home prices and bidding intensity across Arizona locations.
- As a result of the moderation in the Arizona housing market, personal finance experts suggest that investing in real estate might prove to be a prudent decision for those seeking opportunities in the sector.
- The news of economic conditions both nationally and in Arizona, along with regional dynamics and local factors, will influence the future of the Arizona housing market, according to the outlook by Lawrence Yun, Chief Economist for the National Association of Realtors (NAR).
