Buyer Momentum Continues as Seller Conditions Deteriorate in the Phoenix Metro Area

The market continues to shift in favor of buyers, with 12 cities showing a deterioration in seller conditions over the past month, matching last week’s trend. Only five cities posted improvements. Among them, Avondale stands out with a notable 10% gain, while Buckeye improved by 6%, and both Glendale and Surprise saw modest increases of 4%. Maricopa gave sellers a slight boost of 3%, but it still strongly favors buyers overall.

On the other end of the spectrum, cities such as Tempe, Cave Creek, Scottsdale, Gilbert, and Peoria are leading the movement toward more buyer-friendly conditions.

The average monthly change in the Cromford Market Index (CMI)* now stands at -2.7%, a slight improvement over last week’s -2.9%. This signals a continued but slowing downward trend that began earlier this month. Demand remains relatively steady, but rising supply is the more significant factor, and it's bucking seasonal norms by accelerating in April. If this trend continues, we can expect inventory to swell even further during the second half of the year, unless there is a significant shift in the market.

If conditions remain unchanged, sellers may face an increasingly competitive landscape. More listings mean more choices for buyers and more price reductions and concessions from sellers who are eager to secure offers.

Currently, we have:

• Seven cities are still classified as seller’s markets

• Four cities in a balanced market territory

• Six cities are firmly in buyer’s market territory

Only Chandler and Avondale maintain CMIs above 120. The remaining five seller’s markets are barely holding on, with CMIs under 115, indicating minimal advantage for sellers. In practical terms, there are just two cities where sellers may still feel a meaningful edge.

While the overall CMI has been declining since late January, home prices remained surprisingly resilient through Q1. However, that strength may be fading fast. Over the past two weeks, the median sales price decreased by 1.7%, and the average price per square foot dropped by 2%. These shifts are significant for this time of year and raise concerns about further price softening.

If the CMI falls below 80, we may see continued price declines as the market seeks equilibrium. This environment feels reminiscent of Q2 2022, although this time, the absence of major iBuyer activity alters the dynamics. iBuyers, once influential, now represent too small a portion of the market to make a noticeable impact. *Cromford Market Index™ is a value that provides a short-term forecast for the balance of the market. It is derived from the trends in pending, active, and sold listings compared with historical data over the previous four years. Values below 100 indicate a buyer's market, while values above 100 indicate a seller's market. A value of 100 indicates a balanced market.

Housing Market

• Builder sentiment stayed negative in April. Tariff worries and high material costs outweighed a slight boost from lower mortgage rates.

• Purchase mortgage applications dropped 5% for the week but were 13% higher than the same week a year ago.

• More borrowers turned to adjustable-rate mortgages last week after interest rates surged amid market turmoil.

Economy

• Retail sales experienced their most significant increase in over two years last month, as consumers rushed to make purchases ahead of impending tariffs.

• Fed Chair Powell reiterated this week that the Fed must ensure tariffs don't trigger a persistent rise in inflation, making rate cuts unlikely.

• Unemployment claims fell to a two-month low last week, indicating that companies were not resorting to large-scale layoffs as tariffs took effect.

Have a great week!