Market momentum has shifted in favor of sellers in Phoenix, Arizona
- Brad Daniels
- Aug 11
- 5 min read
Market momentum has shifted in favor of sellers in Phoenix, Arizona, noted by the predominance of green markers, which is good news for sellers. The upward trend that began three weeks ago has gained momentum, driven by declining supply through July and August.
The average monthly change in CMI now stands at 6.9%—a solid improvement over last week’s 4.5%.
Fourteen cities improved for sellers, while only three—Maricopa, Tempe, and Surprise—saw gains for buyers. Paradise Valley continues to outperform, thanks to its unusually low supply.
Last week’s surprisingly weak job creation numbers triggered a drop in mortgage rates, with 30-year fixed rates now hovering near 6.55%, their lowest in 10 months. While it’s too soon to measure the impact, lower rates could spur a mild increase in demand. If rates hold steady, this—combined with falling supply—would give sellers even more reason for optimism.
However, once temperatures cool in late September, the supply decline may flatten out. At that point, we’ll be watching closely to see what new market trends emerge.
Mortgage Market and Economic Update – Week Ending 08/08/2025
The shocking July BLS jobs report changed everything. The market is now fully expecting a rate cut in September, and average mortgage rates dropped to near 6.5%. Affordability is improving!
Shocking BLS jobs numbers for July. This report changed everything. The US added just 73K jobs in July (well below estimates), and the unemployment rate ticked up from 4.1% to 4.2% (very nearly 4.3% btw). That was weak, but not terrible.
What was shocking were the revisions: the previously reported figures for May and June were revised down by a total of 258K jobs! As a result, the new May number was +19K (from +139K initially reported) and the new June number was +14K (from +147K initially reported). That’s basically no growth in employment over the last quarter.
We’ve been talking about these consistently large, and usually negative, revisions for some time. In 2025, the average monthly revision has been approximately -77K jobs. These are big numbers! Would the Fed have made the same decision on July 31 if it had known that the real numbers for monthly jobs growth were so low? I don’t think so.
Federal Reserve Governor resigned. Adriana Kugler is on the Board of Governors of the Federal Reserve system. That means that she always gets to vote on monetary policy. Her term was scheduled to end on January 31, 2026. Instead, she’ll exit on August 8, 2025. That means that President Trump will get to appoint her replacement. Since a new Fed Chair MUST be an existing Governor, it’s possible that President Trump could use this opportunity to bring in Powell’s eventual replacement (Powell’s term ends on May 15, 2026). [Federal Reserve]
The Federal Open Markets Committee (“FOMC”) has 19 members, 12 of whom vote. Of the 12, 7 are on the Board of Governors (they always get a vote). The New York Fed President also always gets a vote. The remaining 4 votes come from the other regional Fed Presidents on a
rotating basis.
Mortgage rates dropped.
For the first time in a while, the bond market actually reacted to the BLS jobs revisions. This, combined with Kugler’s resignation, significantly increased the chances of a rate cut at the next Fed meeting on September 17. Think about it: the new BLS data provides ample evidence of a slowing job market, and the addition of a third Trump appointee will (almost certainly) increase the number of dovish (favoring rate cuts) FMOC members. Average 30-year mortgage rates dropped as low as 6.57%, the lowest level of the year. [Mortgage News Daily, Freddie Mac PMMS]
The week before the June PCE data came out, the probability of a rate cut on September 17 was 61%. After the PCE came out (which showed an acceleration in inflation), the probability of a rate cut plunged to 39%. And how about the probability of a rate cut in September after the BLS jobs report and Kugler resignation came out? A very confident 93%!
Bond and Mortgage Market
What a change a week can make! The futures market has gone from pricing in 1–2 rate cuts before year-end to 2–3. So that’s 50–75 bps of rate cuts likely. Over the course of last week, average 30-year mortgage rates dropped from 6.75% to as low as 6.57% (-18 bps). I expect to see a significant increase in refinance volumes when we get the next MBA data.
Here’s what the Fed Funds Rate futures market is currently pricing in for rate cuts:
Note: The current Fed Funds Rate policy range is 4.25–4.50%.
September 17 FOMC Meeting: A 93% probability that rates will be 25 bps below current (up from just 39% a week ago)! 7% probability that rates will remain at 4.25–4.50%.
October 29 FOMC Meeting: 64% probability that rates will be 50 bps below current (up from 15% a week ago). That implies a 25 bps cut at both the September 17 and October 29 meetings.
December 10 FOMC Meeting: 52% probability that rates will be 75 bps below current, 40% probability that they will be 50 bps below current.
Market in a Minute...National View
Housing Market
Sales of starter homes grew 3.9% year over year in June, reaching a two-year high. Their median price was $260K.
Fed Chair Powell addressed home affordability in his press conference, reiterating that the Fed rate plays only a small role in mortgage rates.
Despite sluggish sales, 74% of REALTORS® say they're “very certain” they'll stay in the business, showing resilience amid a shifting market.
Economy
Recurring unemployment claims jumped to their highest level since November 2021, indicating it’s harder for job seekers to find work.
Expectations for a September Fed rate cut surged this week after last month’s jobs report revealed major downward revisions to prior data.
Services activity stalled in July as orders flatlined and hiring weakened. Input costs saw their biggest jump in nearly 3 years.
East Valley Weather
Compared to last week in the East Valley, this week’s weather is only slightly cooler—think of it as turning down the oven from “broil” to “still basically broil.”
Here’s the difference:
Last week: Many days topped 112–114 °F, with several afternoons pushing near record highs.
This week: Early week still hits 111 °F, but mid-to-late week slides down to 102–105 °F by Saturday.
Overnight lows: Last week hovered around 88–90 °F; this week will ease slightly to the low 80s by the weekend.
Have a great weekend, and I appreciate all your referrals.
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