Phoenix Housing Market 2025: Supply Finally Catches Up

by Jeff Hernandez

By Jeff Hernandez, Esq. — Scottsdale Realtor® & Attorney | RETSY | Forbes Global Properties Partner

For the first time in years, Phoenix feels like it’s exhaling. After nearly a decade of runaway demand, new homes are finally matching the pace of people moving here. According to Axios’ analysis of Phoenix housing and population growth, housing units grew 16.4 % from 2014 to 2024, while population rose 15.5 %. For once, supply caught up - at least briefly.

But as anyone who’s lived here knows, a balanced market is never permanent. Behind these numbers lie high construction costs, slowing permit applications, and a community still wrestling with affordability.

Key Takeaways

Phoenix hit a rare moment of balance, but it’s temporary.
Buyer leverage improved, and affordability lagged

The Numbers: Where Phoenix Stands Now

Housing vs. Population Growth

From 2014 to 2024, Phoenix’s housing supply rose slightly faster than its population - a first in decades. Nationally, the U.S. saw a similar but smaller pattern: housing +9.5 % vs population +6.7 %.

Inventory, Prices & Rents

Active Listings: Peaked above 26,000 in May 2025, the highest in a decade, before easing seasonally.
Median Sale Price: ≈ $413 000, with a median list price of $453 000 (Zillow Phoenix Market Tracker).
Median Rent: Down ≈ 4 % YoY to $1,300 for 1-bedrooms; multifamily median ≈ $1,500 (Rental Beast Phoenix Report).

Why Supply Caught Up and Why It May Not Last

The Construction Boom (2022 – 2024)

Developers flooded the market with multifamily projects between 2022 and 2024. Roughly 27,000 units were under construction at the peak, temporarily boosting supply. But 2025 permits have already fallen ≈ 20 %, a sign that today’s balance may fade by 2026.

Migration Patterns

Phoenix added ~16,900 new residents from 2023 to 2024, solidifying its place as the 5th-largest U.S. city ( ABC15 coverage). Most newcomers arrive from California and the Midwest for jobs and affordability, though insurance and utility costs are rising considerations in those areas as well.

Policy Progress: The Housing Phoenix Plan

The city’s Housing Phoenix Plan set a goal of 50,000 homes by 2030 and beat it five years early. As of mid-2025, over 56,000 units had been created or preserved (City Newsroom: Goal Surpassed; Housing Dept. Update).

Market Dynamics: What’s Powering and Slowing Demand

Mortgage Rate Lock-In

Rates hover around 6.3 – 6.8 % far from the 3% lows many owners enjoy. That’s why turnover is thin even with more new builds. Many homeowners prefer to stay put rather than trade up to a higher rate.

Institutional Buyer Retreat

Large investors pulled back in early 2025: 6.9 % of Arizona home purchases ( 7.5 % in Phoenix metro, down from 8.2 % ) came from institutional investors (Axios / ATTOM data). This opens the door for individual buyers and reduces pressure on bulk prices.

Affordability Gap

Despite better inventory, one in six prospective buyers has paused plans due to cost (Axios Housing Affordability survey). Down payments and insurance remain the biggest hurdles.

Pro Tip: Instead of pushing for price cuts, ask for rate buydown credits; they can lower monthly costs more effectively than a $10,000 discount on the purchase price.

Opportunities and Risks

Why Prices May Hold Up

Low-rate owners aren’t selling en masse, construction costs stay elevated, and population keeps rising. Expect flat to modest ( ± 2 % ) price changes.

Pro Tip: Look for over-supplied pockets instead of waiting for a city-wide drop. Micro-markets move independently.

The Risks Ahead

Permit decline → future shortage risk.
Affordability gap → persistent rental stress.
Homelessness up: 9,734 people counted in Maricopa County in 2025 (MAG PIT Report; News release).
Water & infrastructure → ongoing policy constraint.

Segments to Watch

Sub-$500 K homes: Prices down ≈ 2 % YoY.
Luxury ($1 M +): Inventory rising but still competitive for prime locations.
Multifamily rentals: Absorption is steady, and new leases are up.

Pro Tip: Monitor luxury days on market. When it drops below 90 days, momentum is back.

What It Means for Buyers

Buyers finally have breathing room and choices.

Pro Tip 1: Target listings on market 45–60 days, motivated but not stale.

Pro Tip 2: Compare builder incentives with resales; a 3-2-1 buydown can out-save a $15 K cut.

Pro Tip 3: Bring a lawyer’s eye to due diligence, read HOA reserves and title before you fall in love with photos.

Pro Tip 4: Don’t chase interest rates; buy the right home and refi later.

What It Means for Sellers

Precision matters more than ever.

Pro Tip 1: Price within 2% of the true market value to avoid “stale” status.

Pro Tip 2: Stage and photograph professionally; online first impressions decide showings.

Pro Tip 3: Offer certainty with pre-inspections and complete disclosures.

Pro Tip 4: Use rate buydown credits instead of price cuts to achieve better net proceeds.

Investors: Navigating the New Math

With rents cooling and institutional investors retreating, 2025 is a market for patient capital.

Pro Tip 1: Focus on cash flow over appreciation; we’re in a yield cycle.

Pro Tip 2: Recheck insurance and tax assumptions; they’re rising faster than CPI.

Pro Tip 3: Explore local credit union financing for multifamily homes; terms are often better than those from national lenders.

Affordability and Policy Matters

Even with a balanced supply, many households remain priced out. That’s why Phoenix’s early success in its housing plan matters, but the next phase is sustained affordability. The city continues to fund eviction-prevention and affordable-rental programs (Phoenix Housing Newsroom).

Forecast: 2026 and Beyond

Economists expect prices to stay flat to –1 % in 2026 as population growth again edges past new supply (Axios / ASU projection). Rates likely hover near 6 – 6.5 %, with no sharp drops in sight.

Pro Tip: Follow permits, migration, and job growth as leading indicators; median price is a lagging signal.

How to Thrive in This Market

Buyers

Get fully underwritten pre-approval.
Leverage rate buydowns and seller credits when negotiating a deal.
Inspect the home you're buying thoroughly and negotiate repairs early.
Choose neighborhood fit over short-term price swings.

Sellers

Treat the first two weeks as launch week.
Fix defects and make necessary repairs before listing.
Use story-driven marketing.
Provide certainty with clear terms and clean paperwork.

Conclusion

2025 has brought a rare moment of balance to Phoenix’s housing market, a pause that reminds us how much progress we’ve made and how important it is to sustain it. Supply has finally caught up, but affordability and smart growth will shape what comes next.

Jeff Hernandez, Esq., Scottsdale Realtor® and Attorney, help clients navigate Arizona’s evolving market with clarity, precision, and trust. I believe real estate decisions should always be made with both insight and integrity.