Market Update: Buyer Momentum Accelerates in Phoenix, AZ, and surrounding cities.

The latest data shows a shift in favor of buyers—but that shift, which had been slowing in recent weeks, is now beginning to accelerate again.

Over the past month, 14 cities have seen seller conditions deteriorate, while only four cities have shown improvement. Notably, Cave Creek is no longer in the improving group.

The average change in the Cromford Market Index (CMI)* over the past month is -1.9 %, compared to -1.5 % last week. While the difference is slight, it marks the end of a 4-week trend of deceleration and the beginning of a new phase of market softening.

Tempe and Queen Creek, which includes San Tan Valley, are the fastest-declining markets. All other declining cities saw CMI drops of less than 7%.

As of now:

• Nine cities remain in seller’s markets, but none are strongly favorable to sellers—all have a CMI below 141.

• Three cities are balanced, and

• Five cities are in buyer’s markets, with Maricopa and Buckeye especially favoring buyers.

Avondale and Glendale shifted from balanced markets to very weak seller’s markets, joining Phoenix, Tempe, Fountain Hills, and Gilbert in the soft zone between a CMI of 110 and 120. Only three cities are above 120.

Even though we’re typically at the peak of the buying season, supply continues to outpace demand. This is further confirmed by reports from homebuilders, who are experiencing underwhelming sales despite offering elevated incentives.

While the market’s downward trend is not steep, the direction is sliding in favor of buyers.

*Cromford Market Index™ 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.

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Mortgage Market and Economic Update – Week Ending 03/21/2025

Economic Uncertainty Grows, But Mortgage Rates Move Lower

Concerns about the economy are mounting, with rising tariffs, slower GDP growth, and a weaker stock market contributing to uncertainty. However, there’s some good news—despite the Federal Reserve keeping short-term interest rates steady on March 19, mortgage rates are trending downward. Let’s break it down.

Job Openings Rise, But Challenges Remain

After a sharp decline in December, job openings rebounded in January, increasing from 7.5 million to 7.7 million—slightly exceeding expectations. Gains were notable in retail and finance, while professional and business services, as well as leisure and hospitality, saw declines.

Despite the uptick, key hiring indicators suggest weakness in the job market. The hiring rate (3.4%) and quit rate (2.1%) are near decade lows (excluding the COVID-19 period), signaling a stricter environment for job seekers and a lack of confidence in switching jobs.

Job openings remain well below the 2022 peak of 1.2 million, and recent data revisions reduced 2024 job openings by an average of 263,000 per month. Additionally, remote job postings spanning multiple states may inflate job listing numbers, further skewing the outlook.

Stubbornly High Continuing Jobless Claims

Initial jobless claims dipped by 2,000 to 220,000, staying relatively stable. Meanwhile, continuing jobless claims fell by 27,000 to 1.87 million but have remained above 1.8 million since last June.

While new claims remain low, the sustained elevation in continuing claims suggests job seekers struggle to find new employment quickly. Many unemployment benefits last only 26 weeks, so the rise in continuing claims as benefits expire indicates a slower hiring market—aligning with the JOLTS report’s findings on hiring challenges.

Inflation Trends in a Positive Direction

After a jump in food and energy prices pushed inflation higher in January, February’s data brought a welcome shift. Both headline and core Consumer Price Index (CPI) readings came in lower than expected.

Headline CPI rose 0.2% month-over-month, while the annual rate eased from 3% to 2.8%. Core CPI, which excludes food and energy, also increased by 0.2% monthly but softened to 3.1% year-over-year, down from 3.3% previously.

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Housing Market

• Although the FHFA said it will not lower conforming loan limits, it has terminated special purpose credit programs.

• Pending home sales rebounded from a record low in January. Calmer weather and a greater selection of houses provided optimism.

• Mortgage demand from homebuyers was the strongest in nearly 2 months. Purchase apps rose 1% for the week and 7% over a year ago.

Economy

• Unemployment applications held steady last week, indicating that the labor market remains healthy as companies retain employees.

• Concerns about tariffs, inflation, and market volatility pushed consumer confidence for the future economy to a 12-year low in March.

• The fourth-quarter GDP was revised to an annual rate of 2.4%. Continued growth is expected, though tariffs could slow the pace.

Lower temps this week for Phoenix and the east valley cities!

Have a great week!