Learn more about the housing market in Arizona

Every state is unique when it comes to the real estate market, and the AZ housing market is no exception. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life. In the case of Arizona, the picture in 2025 is one of gradual normalization. The average home value sits around nearly $420,000, reflecting a modest year over year increase when compared to the the dramatic pandemic-era surges. Affordability remains a persistent challenge as home prices and living costs continue to outpace wage gains across much of the state.

Arizona Housing Market Overview 

Arizona has a historically buoyant housing market. The state’s favorable climate, lifestyle, and sunny desert neighborhoods have attracted movement into Phoenix and other Arizona cities from more expensive cities like Seattle, Los Angeles, and San Francisco. In fact, 69% of Phoenix homebuyers October of 2025 were looking to stay in the city. Property prices have increased year-over-year, reflecting the strong demand in the market. New buyers who are moving into those communities range from retirement-age seniors to young professionals. Single-family, suburban developments are most in demand, but condos and townhouses near urban centers are gaining popularity as well. 

Recent statistics show that major metropolitan markets like Phoenix, Tucson, Scottsdale, and Sedona are experiencing more moderate movement than in previous years. In Phoenix specifically, home prices were down 0.44% year over year in October 2025, with a median sale price of $449,990. Luxury markets such as Paradise Valley and Cave Creek continue to elevate statewide averages, but overall price growth across Arizona has largely flattened, creating a market that is cooling yet active.

However, as in many states, many residents of Arizona are facing a housing crisis. High mortgage rates and elevated home prices have priced many residents out of the buying market, and experts note that a meaningful increase in inventory will be necessary before supply and demand can stabilize and ease price growth heading into 2026.

Fortunately for Arizona, inventory is on the rise. In October 2025, Arizona had 47,572 homes for sale, which marks a year over year increase of 12.2%. While newly listed homes rose modestly by 6.0%, this slow but steady growth in supply shows promise that buyers may see more options ahead, even as some structural constraints related to Arizona’s climate and geography continue to limit new construction.

Arizona Real Estate Market Trends 

To understand the housing market Arizona operates within, it’s important to keep up with trends. Let’s look at some key ones in Arizona. 

Arizona housing market predictions indicate anticipated growth in select metropolitan areas. However, the forecast is complex and uneven across different regions within the state. Year-over-year growth rates vary, reflecting the diverse economic and demographic factors influencing each area. 

Note: These statistics are based on Redfin’s monthly housing data from October 2025. 

Median Home Price 

Arizona’s median sale price is $447,000, according to Redfin’s monthly housing market data from October 2025. This is a growth of about 0.5% since last year. However, median prices in larger cities like Phoenix, at nearly $449,990, and Mesa, at $473,000, are overall higher than the state average, while prices have skyrocketed in cities like Scottsdale ($860,000) and Sedona ($1,202,000). High market values and rents have made housing unaffordable for many Arizona residents in 2025, many of whom are frustrated with the state of housing in expensive cities like Phoenix. 

Number of Homes Sold in April 2024 

8,021 homes were sold in Arizona in October of this year, up 2.2% from last year according to the Redfin dataset. This metric gives us a good picture of the current sales volume in Arizona. However, keep in mind that this number might be lower compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer's market as sales are slower and sellers have less leverage. 

The current median days on market (DOM) in Arizona is 69 days. This is up 12 days year over year, and is relatively higher compared to other states, but the state’s limited inventory and rising prices indicate a seller’s market. 

New Supply Statistics 

Housing supply in Arizona is showing mixed signals heading into 2026. According to the Common Sense Institute, Arizona jurisdictions issued 12,665 residential building permits in the first quarter of 2025, with a projected year-end pace of about 47,500 units, down nearly 20% from the previous year. The Arizona Capitol Times reports that Arizona’s 2025 permitting pace is the slowest since 2019. While any increase in construction eases long-term pressure, the slowdown suggests that new housing will not expand quickly enough to relieve affordability constraints in 2026.

Property Tax Rate 

The average property tax rate in Arizona is 0.63%, according to Rocket Mortgage. This places Arizona’s average property tax rate as the 12th lowest in the U.S. However, keep in mind that property taxes vary widely depending on the specific county of Arizona and the value of the home. 

Foreclosure Rate in Q1 of 2025

According to ATTOM, Arizona recorded about 0.13% of housing units with a foreclosure filing in the first half of the year, which is roughly 1 in every 750 homes. Although this rate remains below many peak levels and indicates there is no widespread foreclosure crisis, it does reflect a modest uptick compared to previous periods.

Hottest Local Markets in Arizona 

Arizona has several hot urban markets. Here are three of the most noteworthy: 

1. Phoenix Metro Area

As the most populous city in Arizona, Phoenix has the widest range of opportunities for investors. All types of real estate are available here, making many types of leasing possible. The city sees lots of visitors throughout the year, increasing demand for short-term rentals close to Phoenix’s many culinary, artistic, retail, and recreation amenities. According to recent market data from Redfin, Phoenix’s median sale price was approximately $449,990 in October 2025, virtually unchanged year-over-year, while the average listing sold in about 64 days, compared to 50 days the year before. This stability, combined with population inflows from pricier metros and steady economic momentum, continues to present a favorable environment for savvy investors.

2. Tucson

Tucson is the second most populous city in Arizona. Home to both Saguaro National Park and University of Arizona, Tucson sees a steady volume of students, tourists, vacationers, and young professionals each year. New job opportunities in the city are attracting people from out of state, leading to the need for more long-term rentals in the city. Additionally, rental prices are increasing, making Tucson a fortuitous spot for investors. According to Zillow, as of October 2025 the median home value in Tucson is around $322,505, with a year over year change of –3.6%. Despite this, rental activity remains robust and sustained population inflows from other states continue to support long-term rental demand, making Tucson a notable market for investors in 2025.

3. Scottsdale

Scottsdale is known for some of the best luxury homes and communities in Arizona. Wealthier homebuyers are interested in buying here. Scottsdale is also known for its abundance of vacation properties, situated near large golf courses and other attractions for seasonal renters. A seller’s market reigns here, which makes it a good city for real estate appreciation and future profits. According to Zillow, Scottsdale’s average home value in October 2025 is approximately $829,785, reflecting the city’s high-end positioning

Economic Factors Impacting the Arizona Housing Market 

Arizona’s market is influenced by both macroeconomic trends as well as more granular economic factors specific to the state. 

Mortgage Rates 

High mortgage rates are a continuing challenge for would-be homeowners in the U.S. As of late 2025, the average 30-year fixed mortgage rate sits around 6.26% nationally, according to Freddie Mac, with Arizona tracking closely to this range. Higher interest rates deter borrowing and discourage those who already own homes from putting their homes on the market. Many homeowners report feeling “locked in” to their current homes, as it is unlikely they will secure a mortgage rates low as their current one on their next property. Prospective buyers in Arizona should monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Arizona. In the Phoenix-Mesa-Scottsdale area, the Consumer Price Index rose 1.4% year over year as of August 2025, according to the Bureau of Labor Statistics. While this regional inflation figure remains relatively low, it still contributes to higher living and housing costs. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.  

Population Changes and Demographics 

Intraregional migration within the U.S. is another factor contributing to Arizona’s housing market. According to the University of Arizona’s Eller College of Management, the state’s population grew by about 1.3% in 2024, with net migration expected to drive even stronger growth of roughly 1.4% in 2025. This steady inflow of new residents, with many arriving from more expensive states, continues to support housing demand and puts additional pressure on already tight inventory conditions statewide.

Additionally, statewide job growth is expected to remain well above the national pace, and is projected at 2.5% in 2024, easing to 2.3% in 2025 and 2.1% in 2026. This sustained expansion continues to draw new residents from higher-cost states, reinforcing housing demand and adding pressure to Arizona’s limited supply. There seems to be a strong correlation between migration and housing prices especially for climate migration, which could certainly continue to be the case for Arizona. 

Other Factors for Arizona: Water Scarcity 

In Arizona, water scarcity is a major factor influencing the state’s housing market. As described by a recent article from TIME, 41% of Arizona’s water supply comes from pumping groundwater. Unfortunately, groundwater supply has been shrinking, raising the question of whether Arizona should continue building new homes that are dependent on outside water sources. In fact, developers in some cities are struggling to gain approval to build new homes simply due to a lack of groundwater to support those new neighborhoods. This is a significant concern, especially considering our above discussion of how much intraregional migration the state has seen in recent years. 

Arizona is exploring several water solutions, but scarcity continues to impact the housing market. On one hand, the Arizona housing market needs new inventory to ease prices; on the other, new homes can’t be built until the state can verify that they will have sustainable access to water. 

In the meantime, water scarcity will increase utility bills, which means homeowners will have less money to spend on mortgages and banks may enforce stricter lending policies for those in regions with expensive imported water. 

Arizona Housing Market Forecast 

The Arizona housing market is sensitive to dozens of factors, which are being closely monitored by real estate analysts and homeowners across the country.  

In general, housing market predictions for Arizona are positive, with many analysts predicting continued growth for the market. Major cities and metropolitan areas like Phoenix will likely continue to see year-over-year growth. New jobs will continue to lead to population growth and increased net migration to the state. Residents and prospective homeowners will continue to monitor high interest rates throughout the rest of the coming year. 

Likelihood of Arizona Housing Market Crash  

Many would-be buyers have this question: When will the housing market crash in Arizona? 

Given the factors illustrated above, many investors and analysts are concerned about the sustainability of Arizona’s housing market at its current state. NAR previously predicted Arizona’s housing prices and sales to drop substantially for the Phoenix-Mesa-Scottsdale area, but more recent data shows that prices in 2025 have remained relatively stable, with Phoenix’s median sale price down only 0.44% year-over-year.

Some experts are pessimistic about Arizona’s housing market’s future. Others predict a drop in prices (especially in markets like Phoenix) soon, but not a large market crash. A significant price correction would still require major shifts in inflation, mortgage rates, or supply levels, none of which analysts expect to change dramatically heading into 2026

These factors and others will continue to affect the Arizona market, and analysts expect ongoing moderation rather than a sharp downturn as they track both national and regional economic trends.

Forecast for The U.S. Housing Market 

The United States' current median existing-home sale price is around $415,200 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 3 months, keeping conditions constrained.

We’re currently in a seller’s market with buyers looking at continued rising house prices—although they are rising at a slower pace compared to previous years.. The same trend can be seen with renters. Housing continues to appreciate, in general.

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In 2026, he predicts that existing home sales will rise an additional 13%. Yun expects mortgage rates to stabilize at the lower end of the current 6-7% range through 2025 and 2026 as the Federal Reserve continues gradual rate cuts. There's an anticipation of a more balanced market in the coming years, with moderate price growth and a greater amount of Americans re-entering the market.

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Year-to-date single-family housing starts were down about 7.1% in 2025, whereas starts for buildings with five or more units were up roughly 14.5% Higher mortgage rates and inflation (affecting price of materials) were the main causes.

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. According to the National Association of Home Builders, approximately 74.9% of U.S. households were unable to afford a newly built median-priced home in 2025. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.

Arizona Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents across Arizona remain highly unaffordable. A recent study found that nearly 50% of Arizona renters are spending more than 30% of their income on housing costs. While past years marked the peak of this trend nationwide, Arizona’s elevated rent burden reflects ongoing affordability challenges heading into 2026.

Arizona’s current rental market is influenced by all of these trends. Unaffordability extends from high home prices to high rental rates, including in major Arizona rental markets like Phoenix and Tuscan. Below are just a few of the current trends for Arizona’s rental market based on data pulled from Zillow: 

Arizona Rental Market Key Trends 

• Median rent: $1,985
• Month-over-month rent change: -$10
• Year-over-year rent change: -$15
• Available rentals: 22,665 

Conclusion 

The Arizona housing market going into 2026 is marked by a blend of stability and growth, making it crucial for potential buyers and sellers to stay informed about market trends. Whether you're looking to purchase a home soon or sell your property in Arizona, the macro- and micro- economic trends outlined above will affect your decision-making. Market dynamics like changes in home prices, inventory levels, and interest rates will continue to be critical for stakeholders in Arizona real estate. 

FAQs

What is the overall state of Arizona’s housing market in 2025?

The market is experiencing gradual normalization, with average home values hovering near $420,000 and price growth flattening compared to pandemic-era surges.

Are home prices rising or cooling in Arizona right now?

Home prices statewide are mostly stable, with minimal year over year growth (about +0.5%) and some major metros like Phoenix seeing slight declines.

Is Arizona currently more of a buyer’s or a seller’s market?

Arizona still leans toward a seller’s market, supported by limited supply and elevated demand, even as days on market increase.

Is housing affordability improving in Arizona?

Affordability remains a significant challenge, as home prices and living costs continue to outpace wage growth, leaving many priced out.

Is housing inventory increasing in Arizona?

Arizona’s inventory is rising modestly, with 47,572 homes for sale in October 2025 (up 12.2% year over year), giving buyers slightly more options heading into 2026.

Is Arizona facing heightened foreclosure activity?

Foreclosure filings remain relatively low, with about 0.13% of homes affected in early 2025, indicating no widespread foreclosure crisis.

Which cities are strongest for real estate investors?

Phoenix, Tucson, and Scottsdale remain high-demand markets, offering stable prices, strong rental demand, and continued population inflows.

Is Arizona at risk of a housing market crash?

Experts do not anticipate a crash, as prices remain stable, demand persists, and migration plus job growth continue to support the market—though a mild correction in some metros is still possible.