How Inflation and Jobs Are Shaping Rates in Phoenix, Arizona

How Inflation, and Jobs Are Shaping Rates in Phoenix, Arizona

This week’s data paints a slightly less favorable picture for sellers in smaller cities than in the large-city rankings. We’re seeing three cities in seller’s markets and nine leaning toward buyers. Because these secondary markets are much smaller, their numbers tend to swing more dramatically. A handful of extra closings can shift the trends quickly, so it’s wise to view these stats with a bit more caution.

Apache Junction, Laveen, and Sun City continue to show strong seller momentum, while Tolleson, Sun Lakes, Sun City West, and El Mirage are currently leaning toward buyers.

Sellers in Maricopa and Buckeye—who may be frustrated with their standing in the large-city table—can take some comfort in knowing they’re still performing better than Casa Grande and Arizona City. Overall, market movement this week has been positive for sellers, driven by rising demand and a meaningful drop in supply. Green indicators are outpacing red by 13 to 5, and the average monthly change in the Cromford Market Index* (CMI) now sits at +3.6%, up from 1.3% last week.

Fountain Hills and Chandler continue to lead the way for sellers, just as they did last week. Queen Creek and Tempe are also seeing strong momentum with double-digit gains. On the other side of the spectrum, Paradise Valley shows the most improvement for buyers, with its CMI down 17% over the past month. Avondale has slipped by 7%, while the remaining buyer-leaning markets softened by 2% or less. The encouraging sign for sellers is that the three lowest-ranked cities are all turning upward in a meaningful way.

At the moment, we’re looking at seven cities in seller’s markets, four balanced, and 7 in buyer’s markets.

Looking ahead, we expect these trends to hold steady through the end of the year. Demand has strengthened in the more affordable price ranges, while recent softness in cryptocurrency and the stock market seems to be cooling activity at the high end. Notably, the two most expensive markets—Paradise Valley and Scottsdale—are tilting slightly toward buyers, though Scottsdale’s shift is a modest 1%. Fountain Hills remains an exception: despite being a higher-priced area, it continues to perform exceptionally well thanks to strong interest from out-of-state and second-home buyers.

*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.

---

Conflicting Jobs Data Undercuts Expectations for a December Rate Cut

Let’s take a look at what’s moving interest rates this past week and what we have to look forward to from this past shortened holiday week.

Mortgage Spreads Are Quietly Improving — And It Matters More Than Most Think

One of the biggest stories in the mortgage market over the past few weeks has been the continued improvement in mortgage spreads — the gap between the 10-year Treasury yield and the average 30-year mortgage rate. This spread has been historically elevated for most of the past two years, adding unnecessary weight to mortgage rates even when Treasury yields were cooperating.

Recently, however, spreads have been tightening as volatility in the bond market has cooled and demand for mortgage-backed securities has strengthened. That improvement has helped pull rates notably lower, even amid mixed economic data. For borrowers, this means today’s mid-6% rates aren’t just a temporary dip — they’re partially the result of structural healing in the mortgage market itself.

If spreads continue to normalize, it gives us more room for rates to drift lower without needing perfect economic data every week.

What Could Move Rates Next: Inflation, Jobs, and Fed Expectations

Even with improving spreads, the next leg of rate movement will still hinge on upcoming economic data and the Federal Reserve's response.

The bond market is highly sensitive right now. A softer inflation print or weaker jobs number could easily push Treasury yields lower and pull mortgage rates down with them. On the flip side, any indication that inflation is re-accelerating — or that the labor market is still too tight — could stall or reverse the progress we’ve made.

With several key reports on deck in the coming weeks, it’s smart for buyers to stay in close contact on timing and lock strategy. This is one of those environments where rates can move meaningfully in a short amount of time, in either direction.

Looking Ahead: Analysts Split on Where Rates Go in 2026

Looking beyond the next few weeks, experts are divided on how low mortgage rates can realistically go over the next year or two.

Some analysts expect continued improvement in spreads, paired with gradual cooling in inflation, to pull rates toward the high-5% range sometime next year. This camp believes we’re on the front end of a broader unwind in the mortgage market’s risk premium, which would directly benefit borrowers.

Others take a more cautious view. They point to geopolitical uncertainty, federal debt levels, and stickier components of inflation as reasons rates may settle in the low-6% range instead.

The good news? Regardless of which path plays out, both outlooks represent meaningful progress from where we were not long ago — and both still support improved affordability and stronger buyer demand moving forward.

Bottom Line

Between improving spreads, shifting economic data, and a wide range of analyst forecasts, we’re entering a more dynamic and more optimistic phase of the rate cycle. The exact path from here will depend on upcoming reports, but the underlying trend is much healthier than what we’ve seen in the last two years.

If you want to review options or see how today’s rates compare to their long-term goals, I’m always here to help.

---

Market in a Minute...National View

Housing

• Pending home sales increased 1.9% in October, likely helped by lower mortgage rates and an uptick in housing inventory.

• Conventional loan limits grew by 3.26% for 2026, reaching $832,750 for a single-family home in most U.S. counties.

• Purchase mortgage applications were up 8% for the week and were 20% higher than a year ago.

  
  

Economy

• Jobless claims last week unexpectedly fell to their lowest since mid-April, indicating layoffs remain subdued despite economic uncertainty.

• Consumer confidence slipped this month as households grew more worried about jobs and finances, likely in part due to the recent shutdown.

• Retail sales rose less than expected in September, hinting at consumer fatigue from tariff-driven prices, though Q3 growth still looks solid.

---