The Real Estate Market Continues to cool. Here’s Where Things Stand This May in Phoenix, AZ Real Estate Market May 2025

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The Market Is Cooling—Here’s Where Things Stand This May

Let’s talk about where our market stands as we near the end of May—and let’s say, it’s cooler than it was this time last year. Below is a table showing the contract ratio on May 22, 2025, and last year for each dwelling type across the Real Estate market in Phoenix, AZ, May 2025

🔍 Market Snapshot: Cooler Across the Board

No matter the dwelling type, the market is softer than in 2024. Single-family homes continue to hold the most strength, but even they’re in what I’d call a tepid market. On the other hand, mobile homes and apartments are currently the weakest segments. Mobile homes were already cool a year ago, so they’ve only slipped slightly. Apartments, however, have taken the biggest hit.

The contract ratio for apartments has dropped to a historically low 21.2, meaning supply is high and demand is scarce. That weak demand could be driven not just by property features, but also by broader community-level concerns.

💰 Condos & Apartments: Headwinds Ahead

Rising insurance premiums and increased HOA fees weigh heavily on condo and apartment sales. Some HOAs are underinsured, and lenders are taking notice. Special assessments are also more common, none of which help with buyer confidence. Selling in these categories requires serious patience and a strong strategy.

🏡 Single-Family: Tepid but Top Tier

While single-family homes are still leading the pack, the market continues to shift in favor of buyers. This week, the Cromford® Market Index (CMI) dropped by 4.1%. That’s slightly less negative than the prior week’s 4.6%, but it’s still trending the wrong way for sellers.

Only four cities improved for sellers this past month, with Fountain Hills taking the top spot from Chandler. Scottsdale, Chandler, Glendale, and Phoenix all saw notable deterioration. Maricopa and Buckeye showed some positive movement, but they’re still lagging.

Today, we have:

• 3 Seller’s Markets (2 of which are hanging on by a thread),

• 8 Balanced Markets, and

• 6 Buyer’s Markets.

📉 Supply Stabilizing, Demand Weakening

There’s a small silver lining for sellers: the flood of new listings is starting to ease. Between late January and early May, we saw over 10,000 new listings every four weeks—well above the long-term average of 8,665. As of May 21, we’ve dipped to 9,283, and the trend is heading downward.

We like using 28-day periods to track trends because they smooth out quirks like varying month lengths and weekly listing spikes. It’s a more accurate way to measure market momentum.

So while inventory growth is slowing, demand hasn’t found its footing. Higher mortgage rates are also primarily to blame.

📈 Interest Rates: Still a Heavy Anchor

The 30-year fixed mortgage rate is 7.08%, the highest in three months. With inflation concerns, international bond market jitters, and uncertainty around U.S. fiscal policy, we will unlikely see much relief soon. If rates could drop below 6.5%, we should see a meaningful uptick in demand—but for now, many buyers remain on the sidelines.

Final Thoughts

The market isn’t crashing—but it’s evolving. Smart pricing, excellent presentation, and strong agent guidance matter more than ever. Whether you’re considering selling this summer or want to understand local market trends, we are here to help you navigate it confidently.

Housing Market

• April’s single-family housing starts were 1.6% higher than in March. However, permits for future construction fell 5.1% month over month.

• Due to economic uncertainty and high housing costs, existing home sales dropped 0.5% in April and 2.0% for the year.

• According to the ICE Mortgage Monitor, Gen Z made about one in four first-time homebuyer mortgage originations in the first quarter of 2025.
  

Economy

• This week's Fed speakers reaffirmed the Board's commitment to a wait-and-see approach to rate changes due to economic uncertainty.

• New jobless claims were better than expected, while continuing claims rose by 36 K. Despite a stable market, New jobs may be hard to find.

• In an Achieve survey, 32% of households reported financial gains and 33% declines last year, though 57% had expected growth and 10% worsening.  

East Valley Weather

Have a great week!