Buyers Still Have The Edge In Phoenix, Arizona… But The Shift Is Losing Steam
- Brad Daniels
- Nov 3
- 4 min read
Buyers Still Have The Edge In Phoenix, Arizona… But The Shift Is Losing Steam as I see a slightly stronger table than last week. 13 cities have become more favorable for buyers over the past month, while the remaining five have moved in a direction favorable to sellers. The latter group is Tempe, Buckeye, Fountain Hills, Chandler, and Gilbert.
Leading the larger group, improving for buyers are Peoria, Goodyear, Scottsdale, and San Tan Valley. All the other large cities that moved in favor of buyers did so by 6% or less.
The average change in Cromford Market Index (CMI)* was -2.1%, up from -2.6% last week. Though the trend still favors buyers, it has been decelerating for 2 weeks now.
We have six cities in seller's markets, five in balanced markets, and seven in buyer's markets.
*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.
Fed Cuts Rates for the Second Time This Year — Even Without New Data
Despite being “in the dark” when it comes to new data, the Fed cut short-term interest rates for the second time this year and also announced the official end of QT — Quantitative Tightening. Mortgage rates remain near multi-year lows but can’t seem to crack into the fives.
The Fed cut rates for the 2nd time this year
The “data-dependent” Fed is currently operating in the dark (except for the CPI report). Despite this, most Fed members voted to cut rates by 25 basis points (25 bps = 0.25% = one-quarter of a percentage point). Two voting members dissented. Trump appointee Stephen Miran wanted a larger 50-bps cut. Jeffrey Schmid (KC Fed President) wanted no cut.
Bye Bye to QT
After the FOMC meeting, Fed Chairman Jerome Powell also announced the official end to the balance sheet run-off (the end of QT, or quantitative tightening). QT involved the Fed selling securities (mostly treasury bonds), which put downward pressure on prices and upward pressure on yields. With QT over, that headwind for rates has stopped blowing.
CPI (inflation) was a bit better than expected. In September, “headline” CPI climbed to +3.0% year-over-year (from +2.9% YoY), while “core” CPI eased to +3.0% YoY (from +3.1% YoY). Since most Wall Street economists forecast that “core” CPI would be flat at +3.1% YoY, the actual result was a relief for the bond market.
This report was delayed for several weeks due to the government
shutdown. In fact, BLS statisticians were called back to work to compile the data because it was needed to calculate the COLA (Cost of Living Adjustment) for Social Security Payments.
Bond and Mortgage Market
The yield on the 10-year US Treasury bond remained just below 4% while average mortgage rates (according to Mortgage News Daily) dropped to 6.13%. We are very, very close to having the lowest mortgage rates in 2.5 years.
Note: After the rate cut on Oct 29, the Fed Funds Rate policy range is now 3.75–4.00%. The probabilities below come from the CME Group website and are implied from the Fed Funds Rate futures market.
December 10 FOMC Meeting: 87% probability that rates will be 25 bps below current (was 92% last week). In other words, another 25 bps rate cut on December 10.
January 28 FOMC Meeting: 49% probability that rates will be 25 bps below current. In other words, no rate cut at this meeting. 44% probability that rates will be 50 bps below current. In other words, a 25 bps rate cut at each of the December 10 and January 28 FOMC meetings.
Year-end 2026: While the predictive power of the Fed Funds Futures market fades the further you go out, the market currently expects that rates will be between 75–100 bps below current (2.75–3.25%) at the end of next year. So two rate cuts in the near term, and 1–2 more over the course of the year.
Housing Market
Pending home sales were surprisingly flat in September. Buyers were likely sidelined by economic uncertainty and labor-market concerns.
Home prices rose just 1.5% year over year in August, the slowest pace in over 2 years and below the current inflation rate of 3%.
Contrasting slower pending sales, last week's purchase mortgage apps rose 5% over the prior week and were 20% higher year over year.
Economy
The Fed cut its policy rate by a quarter point, but mortgage markets had already priced in the cut and did not benefit.
Fed Chair Powell said in his press conference that a December rate cut was not a foregone conclusion, pressuring mortgage rates higher.
The government shutdown has once more delayed key economic data, including this week's reports on jobless claims, inflation, and Q3 GDP.
East Valley Weather
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