Market Momentum Shifts Further in Favor of Sellers in Phoenix, Arizona

The Market Momentum Shifts Further in Favor of Sellers in Phoenix, Arizona

By: Brad Daniels with the East Valley Real Estate Team.

The upward momentum in the Greater Phoenix housing market has now carried into its fifth consecutive week. Supply continues to contract while demand edges higher, pushing the average monthly change in the Cromford Market Index (CMI)* to 9.3%, up from 8.4% last week. This acceleration is significant, as it reflects the strongest sustained shift we’ve seen since early summer.

City-Level Performance

• This week, 14 cities improved in favor of sellers, while only two cities (Maricopa and Tempe) shifted toward buyers, and one city held steady.

• Fountain Hills, Cave Creek, and Scottsdale posted stronger percentage gains than Paradise Valley.

• Avondale, Peoria, and Gilbert are standouts, each showing double-digit CMI gains of 10% or more, signaling particularly strong momentum at the lower to mid-price ranges.

Current Market Breakdown

• Six cities are now in seller’s market territory (2 of these only marginally).

• Four cities remain balanced.

• Seven cities continue to favor buyers, though the number is shrinking week over week.

Overall, the data suggests that while the luxury sector remains insulated, pressure is mounting in the mid-to-lower price ranges, where sellers hold increasing leverage.

*Cromford Demand Index™ is a value that provides a short-term forecast for the demand for resale homes in the market. It is derived from the trends in pending and sold listings compared with historical data over the previous four years. Values above 100 indicate more demand than usual, while values below 100 indicate less demand than usual. A value of 100 indicates the demand is close to normal.

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Mortgage Market and Economic Update – Week Ending 08/22/2025

The week ended on a very positive note for mortgage interest rates, compliments of Fed Chair Jerome Powell.  Let’s take a look….

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Fed Rate Cut Likely

Fed Chair Jerome Powell signaled on Friday that a rate cut could be coming, saying the “shifting balance of risks may warrant adjusting our policy stance.” His comments were the highlight of this week’s Jackson Hole Economic Symposium. So far this year, the Fed has kept its key interest rate steady while trying to balance inflation and employment, but speculation has been growing about a possible cut at their next meeting on September 17.

Just as a quick refresher: when the Fed makes changes to interest rates, they’re specifically adjusting the Fed Funds Rate, which is the short-term, overnight rate banks use when lending to one another. This rate sets the tone for other interest rates across the economy, but it doesn’t directly control mortgage rates or other long-term rates.

Mortgage rates tend to follow the Fed Funds Rate. 

Despite my comments above, mortgage rates do tend to follow the Fed Funds Rate.  While the FFR and mortgage rates can move in different directions in the short term (and the relationship is not 1:1), over the long term, the correlation is clear (see graph below). It’s also pretty clear that when the Fed is cutting the FFR aggressively, we’re usually already in a recession.

Blue line: Average 30-yr Mortgage Rate; Green line: Effective FFR

By the way, if the FFR moved 175 bps lower from where it is today, it would be 2.75%. Assuming the same spread between the FFR and average 30-yr mortgage rates (currently 200 bps), that would mean 4.75% for mortgage rates! We’d be off to the races again! (if that spread held, of course)

Bond and Mortgage Market

The good news is that average 30-year mortgage rates continue to hang near 6.5%. Part of the reason for this relative stability is that the “spread” between mortgage rates and US bond yields has been declining. That’s good news for borrowers. We’ve certainly seen a big pickup in consumer inquiries (coming from the Home Report) regarding refi opportunities.

Here are the current probabilities for Fed rate cuts at the next three meetings.

Note: The current Fed Funds Rate policy range is 4.25–4.50%.

• September 17 FOMC Meeting: A 94% probability that rates will be 25 bps below current after Powell’s comments on Friday. 27% probability that rates will be unchanged.

• October 29 FOMC Meeting: 34% probability that rates will be 50 bps below current (down big from 63% a week ago). 51% probability that rates will be 25 bps below current (implying a rate cut in either September or October, but not both).

• December 10 FOMC Meeting: 25% probability that rates will be 75 bps below current (down big from 53% last week). There is a 47% probability that they’ll be 50 bps below the current level.

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Market in a Minute...National View

Housing Market

• In August, builder confidence hit its lowest point in 5 years. Rising material costs and tariff anxiety are weighing on builders.

• Existing home sales rose 2% in July, topping forecasts. With prices up more than 40% since 2020, affordability remains a major challenge for buyers.

• Purchase mortgage applications were nearly flat last week but still ran 23% above last year and were at their strongest pace in 4 weeks.

Economy

• Jobless claims rose to 235K last week, up 11K, reaching the highest level since June and signaling a possible cool-down in the labor market.

• Minutes from last month's Fed meeting showed debate over tariffs’ impact on prices. Board members worried more about inflation than job losses.

• Tariffs are starting to impact consumer prices. Retailers like Home Depot and Walmart acknowledge passing rising import costs on to shoppers.

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Weather

RelocateToAZ.com helps families move to Arizona with expert real estate guidance. Brad Daniels and his East Valley Real Estate Team provide trusted service in Metro Phoenix and the East Valley. Have a great week! #CallBradToSellYourPad #RelocateToAZ