The Impact of New Home Construction on the Phoenix Metro Market in 2025

by Jeff Hernandez

As the Phoenix Metro real estate market continues to evolve, new home construction is playing a significant role in shaping housing trends.

With inventory challenges and shifting buyer preferences, new builds are becoming a key factor in balancing supply and demand.

Here’s how new home construction is affecting the Phoenix Metro market in 2025—and what it means for buyers, sellers, and investors.

New Home Sales Are on the Rise

After a slowdown in 2022, homebuilders in Phoenix are making a comeback.

Sales Growth: New home sales have surged, with a 4.1% increase in April alone compared to March, according to the U.S. Census Bureau.
Increased Share of the Market: New homes now account for nearly 14% of all home sales, up from the historical average of 10%.
Strong Builder Sentiment: For the first time since mid-2022, builder confidence is high, signaling optimism for the future of new construction.

This growth in new construction is offering much-needed inventory in a market where existing homes remain limited.

Why Are New Homes Gaining Popularity?

Several factors are contributing to the rising demand for new homes in the Phoenix Metro area.

Low Inventory of Existing Homes: Many homeowners with low mortgage rates are staying put, limiting resale inventory.
Modern Features & Energy Efficiency: Buyers are drawn to modern layouts, smart home technology, and energy-efficient designs in new builds.
Builder Incentives: Many builders are offering price reductions, mortgage rate buy-downs, and upgrade packages to attract buyers.

For buyers seeking turnkey properties with the latest amenities, new construction is an attractive option.

Regional Trends: Where New Homes Are Booming

While Phoenix Metro as a whole is seeing growth, certain areas are leading the charge in new construction.

South Phoenix & East Valley: These regions are experiencing significant new development, offering more affordable options for first-time buyers.
Scottsdale & Paradise Valley: While known for luxury resale homes, these areas are also seeing high-end new builds with cutting-edge designs.
Arcadia: Blending historic charm with new luxury, Arcadia remains a hot spot for buyers seeking both character and modern amenities.

If you’re looking to invest in a new home in Phoenix Metro, the opportunities are diverse and growing.

What This Means for Buyers & Sellers

Whether you’re considering buying a new build or selling an existing home, it’s important to understand how new construction is impacting the market.

For Buyers: New homes offer modern features, builder warranties, and fewer maintenance issues. However, be prepared for longer timelines and potential construction delays.
For Sellers: Existing homes need to stand out against new builds, which may require upgrades, staging, or competitive pricing to attract buyers.
For Investors: The growth of new construction can increase neighborhood value and provide opportunities for rental properties or fix-and-flip projects.