It is a Strong Start for 2026 for the Greater Phoenix Arizona Housing Market

As we kick off 2026, it is a strong start for the Greater Phoenix, Arizona Housing Market, particularly compared to the cautious tone many of us felt heading into the final quarter of last year. Let’s break down what the numbers are telling us and what to watch as we move deeper into our winter market.

The Big Picture: Supply, Demand & Momentum

Using ARMLS data comparing January 1, 2026, vs. January 1, 202,5, across all areas and property types:

• Active Listings (excluding UCB & CCBS):22,248 vs. 20,007 last year (+12% YoY), but down 9.0% from the previous month

• Active Listings (including UCB & CCBS):24,837 vs. 22,196 last year (+12% YoY), and down 10.3% from the previous month

Supply declined steadily throughout December, finishing the year 10% lower than the end of November. That said, we still have 12% more inventory than we did at the start of 2025, meaning buyers continue to have solid options—at least for now.

Sellers Gaining Ground

The market improved for most sellers during December:

• 16 cities moved in favor of sellers

• 1 city (Paradise Valley) moved down

• 1 city (Avondale) remained flat

The Cromford Market Index* is currently up 9.7% over the past month, slightly below last week’s 10.8% but still a meaningful gain.

Strongest seller momentum: Gilbert, Peoria, Queen Creek, Phoenix, Glendale, and Goodyear

Current market breakdown remains unchanged:

• 10 cities in a seller’s market

• 2 balanced

• 6 buyer’s markets

Contract Activity & Closings

• Pending Listings: 3,373 vs. 3,307 last year (+2.0% YoY), but down 19% from the previous month

• Under Contract (Pending + CCBS + UCB): 5,782 vs. 5,496 last year (+5.2% YoY), but down 20% month over month

• Monthly Sales:6,374 vs. 5,576 last year (+14% YoY) and up 18% from November

Despite the holidays, December delivered 22 working days—one more than December 2024. That gave closings a 4.8% timing advantage, but with sales up 14.3%, December still counts as a clear win.

A natural side effect of strong closings? Listings under contract dropped sharply going into January. Even so, the count remains over 5% higher than the start of 2025, which is still a healthy sign.

Pricing: Steady, Not Spiky

• Average Sales Price per Sq. Ft.:$303.80 vs. $302.98 last year (+0.3% YoY), +2.4% from the previous month

• Median Sales Price:$455,000 vs. $450,000 last year (+1.1% YoY), unchanged from November

Luxury homes dominated closings early in December, pushing the average $/SF higher, but overall pricing growth for 2025 finished nearly flat. Median prices—less influenced by luxury sales—rose just $5,000 year over year, reinforcing stability rather than overheating.

Notably, household incomes rose faster than home prices last year, which quietly improves affordability and supports buyer confidence.

What Happens Next Matters

The next few weeks will set the tone for early 2026:

• Will we see an intense wave of new listings, as we did early last year?

• Or will supply remain subdued, as it was in the final two months of 2025?

• Can lower interest rates—now better than almost all of 2025—translate into stronger buyer demand?

Greater Phoenix has outperformed low expectations since October, and the Cromford® Market Index is trending back toward the balanced zone (90–110).

Bottom Line

• Buyers: Still have choices, improving affordability, and negotiating power in select areas.

• Sellers: Conditions are meaningfully better than most of last year, especially in high-demand cities.

• Everyone: January is a pivotal month.

Overall, the outlook is positive—but the next few weeks will tell us whether this momentum holds as we move into the peak winter season.

As always, if you’d like to discuss how this data applies to your specific neighborhood or your plans for 2026, Brad is happy to dive in.

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Rates, Resets & Real Opportunities:

What the Mortgage Market Is Signaling for 2026

Let's take a look at what we saw this past year and what we can expect going into 2026.

Mortgage Rates Close Out 2025 at Their Lowest Point of the Year

Mortgage rates ended 2025 on their most encouraging note yet, dropping to 6.15% for the average 30-year fixed-rate mortgage in the final week of December. This marks the lowest rate we've seen all year and represents a significant improvement from where we started.

To put this in perspective, rates began in 2025 at around 7%, meaning borrowers are now enjoying nearly a whole percentage point in savings compared to just 12 months ago. That difference translates into real money in your pocket every month.

What Drove Rates Down?  Several positive factors came together to create this favorable environment. The Federal Reserve delivered three consecutive rate cuts in the final months of 2025 (September, October, and December), signaling confidence that inflation is moving in the right direction. While the Fed's benchmark rate doesn't directly control mortgage rates, these policy moves reflect a broader economic stabilization that benefits borrowers.

Additionally, the 10-year Treasury yield, which mortgage rates closely follow, has been trending downward. As of the end of December, the 10-year Treasury was hovering around 4.12%, down from 4.52% a year earlier. This decline in Treasury yields created the breathing room lenders needed to offer more competitive rates to homebuyers.

Where Do Rates Stand Today?  As we kick off 2026, mortgage rates remain in this encouraging range. The average 30-year fixed rate sits around 6.15%, while 15-year fixed rates are even more attractive at approximately 5.44%. For buyers who have been watching from the sidelines, this represents one of the best opportunities we've seen in well over a year to lock in a favorable rate.

What to Expect in Early 2026

The outlook for the coming months is cautiously optimistic. Most housing economists predict rates will remain relatively stable in the low-to-mid 6% range throughout early 2026. While we're unlikely to see dramatic drops, the gradual downward trend appears sustainable as long as inflation continues to moderate and the economy maintains its current trajectory.

The key takeaway? If you've been waiting for the "perfect" moment to buy or refinance, the market conditions we're seeing today are as favorable as they've been in quite some time. While rates may drift slightly lower over the course of the year, trying to time the market perfectly can mean missing out on great opportunities that are available right now.

The Bottom Line

Lower borrowing costs combined with a more balanced housing market create genuine opportunities for buyers and those looking to refinance. With rates at their lowest point in over a year and housing inventory gradually improving, 2026 is shaping up to be a year when homeownership goals can become reality for many families who've been patiently waiting.

The Fed's 2026 Approach and What It Means for Your Mortgage

After an active year of monetary policy adjustments, the Federal Reserve has signaled a more measured approach for 2026—and that's actually good news for anyone navigating the mortgage market. Let me explain why.

The Fed's Recent Actions

Throughout late 2025, the Federal Reserve cut its benchmark interest rate three times, reducing the federal funds rate by a total of 75 basis points. These cuts brought the rate down to 3.50%-3.75%, reflecting the Fed's confidence that inflation pressures are easing while the labor market remains relatively healthy.

However, Fed officials have now indicated they expect to make only one or two additional cuts in 2026, taking a more cautious "wait and see" stance. Some people might hear this and worry that it means rates won't improve—but that's not quite the whole picture.

Why Stability Is Actually Encouraging

Here's the key point: the Fed's cautious approach signals a positive outlook for the economy. When the central bank is comfortable with a slowing rate cut, it indicates it is confident that inflation is under control and that emergency measures are not required. This kind of stability is precisely what creates a healthy mortgage market.'

Think of it this way—rapid, unpredictable changes in Fed policy create volatility in mortgage rates. A steady, predictable approach allows lenders to price mortgages more competitively because it provides a clearer view of where the economy is headed.

Current Rates: The Evidence

We're already seeing the positive effects of this environment. Despite the Fed signaling fewer cuts ahead, mortgage rates remain near their 2025 lows, averaging 6.15%-6.25% for a 30-year fixed mortgage. This demonstrates that the mortgage market has already priced in the Fed's expected path and that stability is being rewarded with competitive rates.

The 2026 Outlook

Looking ahead, most forecasters expect mortgage rates to remain in the low-to-mid 6% range throughout 2026. Organizations such as the Mortgage Bankers Association project rates averaging 6.0%-6.4%, while Fannie Mae's forecast suggests rates could approach 5.9% by year-end.

The key factor will be whether inflation continues its downward trend. If consumer prices continue to moderate toward the Fed's 2% target, there's room for rates to drift lower even without aggressive Fed cuts. Conversely, if inflation proves stickier than expected, rates could remain at current levels—but that's not necessarily bad news when you consider that today's rates are already significantly better than where we were in early 2025.

The "Rate Lock" Effect Is Finally Starting to Ease—Here's Why That Matters

For the past few years, the housing market has been caught in an unusual predicament: millions of homeowners wanted to move but felt trapped by their ultra-low mortgage rates. The good news? There are signs that the "rate lock-in effect" is beginning to loosen, which could create more opportunities for both buyers and sellers in 2026.

Why the Lock Is Beginning to Loosen

Several encouraging developments are making it easier for homeowners to consider selling:

1. Rates Have Improved Meaningfully. With mortgage rates now in the low-to-mid 6% range rather than the 7%+ levels we saw in early 2025, the "rate shock" of moving is less severe. A homeowner with a 3.5% rate, facing a 6.2% new mortgage, finds the math more manageable than at 7.5%.

2. Home Equity Provides a Cushion. Thanks to strong home price appreciation since 2020, many homeowners have substantial equity. This wealth can be applied as a larger down payment on the next home, reducing the loan amount and softening the impact of the higher rate. Some sellers can even afford to buy their next home outright or with a much smaller mortgage.

3. Life Doesn't Wait Forever. After several years of postponing moves, more homeowners are deciding that their life circumstances matter more than rate optimization. Families need more space, empty nesters want to downsize, and career opportunities require relocations. The survey data confirms this: while 21% of mortgage holders cite their low rate as a reason for staying put, nearly as many (19%) say they're staying simply because they like their current home—not because their rate traps them.

4. Unique Solutions Are Emerging. Creative strategies are helping bridge the rate gap. These include:

• Assumable mortgages on certain government-backed loans (VA, FHA, USDA)

• Temporary rate buydowns negotiated with sellers or builders

• 2-1 or 1-0 buydowns that reduce rates in the early years

• Hybrid ARM products offering lower initial rates

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The Market in a Minute

Housing

• Inventory tightened heading into the end of the year, but buyers still have options. Active listings fell roughly 10% in December, yet total supply remains 12% higher than this time last year, keeping selection healthier than early 2025.

• Seller momentum improved across most of Greater Phoenix. 16 of 18 cities moved in favor of sellers during December, with the Cromford Market Index up 9.7% month over month, led by gains in Gilbert, Peoria, Queen Creek, Phoenix, Glendale, and Goodyear.

• Sales activity was a standout strength in closing out 2025. December closings rose 14% year over year, pushing contracts lower heading into January—but under-contract totals remain over 5% higher than a year ago, signaling underlying demand is still intact.

  
  

Economy

• Mortgage rates have stabilized in the low-6% range, supported by calmer bond markets and lighter holiday trading. This stability — even without significant Fed action — is helping restore confidence and reduce volatility-driven hesitation.

• The Federal Reserve remains “on pause,” but expectations matter more than action. Bond markets are forward-looking, pricing in potential 2026 rate cuts based on inflation and employment trends that continue to influence mortgage rates.

• Economic data point to slower but healthier growth, with easing inflation pressures and a cooling labor market—conditions that typically support lower or stable interest rates over time.

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Have a great week!