Home prices in metro Phoenix are on the rise again, setting a new record despite the hover of mortgage interest rates around 7 percent. According to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which was released on February 27, nationwide home prices saw a 5.5% increase in December, while Phoenix reported a 3.8% bump in the same month. In the rhythm of the real estate roundelay, normalcy makes its return to the market, as indicated by Greg Hague, CEO of 72Sold residential real estate agency. "Today's market feels good, with enough home inventory that buyers have choices, and enough buyer demand to steadily push up home values," Hague told the Business Journal. "Rising home prices are a key to making buyers pull the trigger and say yes to a 7% interest rate."

The median sale price in metro Phoenix has climbed to $455,000 as of February 1, with the average sale price in January reaching an all-time high of $590,845, noted Chris Morrison, founding partner with Retsy, citing the Cromford Report. Morrison observed, "In December 2022, we peaked out at $577,443, which means this is the highest average sale price ever." Offering a glimpse of the spring market festivities, the season for real estate agents to thrive, the market watches interest rates with a keen eye. "Active listings continue to increase," shared Carson Eilers, broker and owner of Original Realty Co., in an interview with Bizjournal. "It's still a challenging time for buyers and sellers with 7% interest rates now in full effect."

Phoenix's housing stock, once stretched thin to just over 15,000 homes, hovers beneath a normal market of 20,000 to 25,000 homes of available inventory. Hague pointed out that there are currently 8,400 homes under contract waiting to close. "This is a relatively healthy listings-to-sales ratio, slightly favoring sellers, which is why homes are going up in value," Hague explained. Circling back to the historic scarcity, the metro Phoenix inventory had dipped below 4,000 in March 2022 amidst a surge of selling activity sparked by the low interest rate market. The luxury market is also experiencing momentum, driven by robust demand and scant inventory. According to Robert Joffe, co-founder of The Joffe Group at Launch Powered By Compass, the luxury market's pace remains unexpectedly exceptional. "There has been a lot of talk about the Fed lowering interest rates but it hasn't happened yet," Joffe mentioned to Bizjournal. "There are definitely buyers waiting on the sidelines."

With the future possibly shaping up to see a drop in interest rates, ready buyers may quickly flood into the Phoenix market, pressing home prices upward and swiftly absorbing inventory. "Buying a home today, at a time when there is a selection of homes to choose from, few bidding wars, and many motivated sellers, is a huge opportunity for buyers with vision," emphasized Hague. Builders are also making moves to capitalize on the market opportunities, with new constructions emerging as hotspots of potential. "Newly constructed homes have emerged as a beacon of opportunity in the market," Keith Burton, a Realtor with The Rider Elite Team told Bizjournal. In 2023, new builds accounted for 30% of Phoenix's real estate, and with attractive interest rates below 5% and additional incentives being offered by builders, the thirst for new homes continues to run high amid a critically low supply of 36,578 vacant lots available.