Phoenix housing market update June 2025. The Market is Still Cooling for Sellers – But a Prime Opportunity for Buyers in Phoenix, Arizona.

The Greater Phoenix housing market remains in favor of buyers. The average weekly change in the Cromford Market Index (CMI) is now -2.7%, slightly more negative than last week's -2.5%. This reverses the three-week trend of gradually less negative movement. That said, the shift isn’t dramatic—one week doesn’t make a trend, so there’s no need to panic just yet in the

Phoenix housing market update June 2025.

Only one city has improved for sellers over the past month, three fewer than last week. Paradise Valley stands out with a strong +10% gain, but its small unit volume means it doesn’t influence the overall market much (despite its impressive dollar volume). Meanwhile, Surprise and Mesa, Arizona, held steady month-over-month, which is a relative win compared to the 14 cities that declined. Fortunately, no city saw double-digit drops, but Phoenix and Buckeye, Arizona, came close, each falling by 7%. Since Phoenix alone accounts for approximately 25% of the Central Arizona housing market, its decline carries more weight than PV’s gains.

As of now, we have:

• 3 seller’s markets (2 are weak)

• 6 balanced markets

• 8 buyer’s markets

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Tempe shifted from balanced to buyer’s, while Chandler slipped from seller’s to balanced.

While this isn’t great news for sellers, buyers are in a particularly advantageous position. They’re benefitting from increased inventory, motivated sellers, and widespread concessions—including mortgage rate buydown incentives from both resale and new home builders. We haven’t seen such favorable conditions for buyers since March 2009.

Paradise Valley’s performance reflects strength in the stock and crypto markets. Unfortunately, the bond market continues to struggle, which keeps mortgage rates elevated. Many consumers mistakenly believe the Federal Reserve directly controls mortgage rates, but the real driver is the 10-year Treasury yield, and demand for T-bills is currently low. A declining U.S. dollar has weakened foreign appetite for American bonds, further slowing any downward pressure on rates.

One silver lining: Arizona real estate has become more affordable for international buyers due to shifts in currency exchange rates. As of June, U.K. buyers are seeing roughly a 10% discount compared to January, and Swiss buyers are saving about 11%. Even Canadians are seeing a 4% advantage. Still, international buyers represent only a small fraction of demand, especially since interest from China has cooled considerably. If we’re going to see a meaningful rebound, it’ll need to come from domestic buyers.

This past week brought several noteworthy developments in the financial markets and broader economy, most notably from the Federal Reserve. We’re also seeing new waves in inflation data, fresh discussion around tariffs, and shifts in Treasury yields that continue to influence mortgage rates. Let’s break it all down and examine what it means for the housing and lending environment.

Fed Holds Rates Steady, but Hints at Future Cuts

At this week’s FOMC meeting, the Federal Reserve chose to keep the federal funds rate unchanged, maintaining the current target range of 4.25–4.50% for the sixth straight time. While this decision was expected, the updated “dot plot” revealed a subtle shift in the Fed’s outlook. The majority of Fed officials now anticipate two quarter-point rate cuts by the end of 2025, rather than three, as previously projected. It’s a reminder that while rate cuts are likely coming, the timeline and pace remain highly dependent on incoming data, especially inflation.

Fed Chair Jerome Powell emphasized that while progress has been made on reducing inflation, policymakers still need more confirmation before taking action. However, some officials, including Fed Governor Christopher Waller, hinted that a July rate cut is not off the table, particularly if inflation continues to cool or if economic data weakens more than expected.

Inflation: Still Easing, but Not Without Some Bumps

On the inflation front, the trend remains encouraging, albeit somewhat uneven. Recent data indicate that core inflation is holding relatively steady, with year-over-year figures around 2.8%, and monthly increases coming in softer than Wall Street had anticipated. That said, expectations for the Fed’s preferred inflation gauge—the PCE index—have ticked slightly higher, now projected to end the year closer to 3.0%.

One underlying pressure point to watch: short-term inflation expectations among consumers have been creeping up slightly. That’s something the Fed pays close attention to, as inflation expectations can often influence actual future inflation.

Tariffs and Trade: An Undercurrent of Uncertainty

Trade tensions also grabbed headlines this week. While there is no immediate crisis, there is growing concern that a temporary pause on certain tariffs—especially those affecting Canada, the EU, and some Asian partners—could expire in early July without a new agreement being in place. Markets are watching this closely, as renewed tariffs could reintroduce inflationary pressure and disrupt supply chains, just as things were beginning to stabilize.

Interestingly, a federal court recently struck down parts of the Trump-era tariffs under the International Emergency Economic Powers Act (IEEPA), citing overreach. However, the ruling is being appealed, and uncertainty still lingers over the longer-term direction of trade policy.

Markets React: Yields Inch Up, Mortgage Rates Hold Firm

With no clear timeline for rate cuts and a dash of geopolitical tension in the Middle East, markets moved cautiously this week. U.S. Treasury yields rose slightly, and 30-year mortgage rates remain stubbornly high, hovering around 6.8% to 7%. The bond market initially reacted to the Fed’s press conference with a slight drop in yields, but those gains were short-lived as investors reassessed the broader economic risks.

Safe-haven assets, such as gold, saw a boost amid global unease, while equities pulled back modestly. The overall tone remains one of caution—investors are eager for rate cuts, but aren’t quite convinced they’ll come as quickly or as profoundly as once hoped.

As always, I’m here to help make sense of how these broader economic shifts affect interest rates and your overall buying power.  Feel free to reach out with questions or scenarios you’d like to run by me.

🛢️ Rising Oil Prices → Higher Inflation

• Conflict in the Middle East typically raises oil prices, which has already begun to happen.

• This affects everything from transportation to construction costs, potentially pushing inflation higher.

• If inflation rises, the Federal Reserve may hold interest rates higher for longer or even raise them again, despite recent progress in cooling prices.

🏦 Mortgage Rates Could Stay Elevated

• The bond market reacts to global uncertainty by moving into safe-haven assets (like U.S. Treasuries), but if inflation fears outweigh risk-off sentiment, mortgage rates may stay high or rise further.

• That puts more pressure on housing affordability, which is already a challenge in most U.S. metropolitan areas.

🏘️ Buyer & Seller Behavior

• Buyers: Some may hold off due to rate volatility or economic uncertainty. Others may rush to lock in rates if they fear future increases.

• Sellers: Might delay listing until things stabilize or price cuts are no longer needed, leading to tighter supply.

🛠️ New Construction Could Slow

• Rising fuel and material costs may impact builder margins, potentially delaying or canceling new projects, especially in more cost-sensitive segments such as entry-level housing.

📈 Regional Impact in Phoenix, Arizona

• In Phoenix and its surrounding areas, demand remains high, but affordability is the gatekeeper.

• A jump in mortgage rates or inflation could slow sales velocity, increase the number of days on market, or put pressure on pricing, especially in suburban and luxury segments.

• Conversely, if rates stabilize and inflation fears ease, buyers may return, making this a short-term dip rather than a true disruption.

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Have a great week!