Arizona Real Estate Market Trends in 2025
The Arizona real estate market has been experiencing significant shifts in recent months, influenced by various factors, including supply and demand dynamics and the current state of interest rates. As we move through 2025, it’s important to examine these key trends and what they mean for both buyers and sellers in the state.
Supply and Demand
In Arizona, the supply of homes for sale remains historically low, especially in high-demand areas like Phoenix, Scottsdale, and Tucson. Despite some fluctuations in new listings, inventory levels are still not meeting the needs of the growing population.
Arizona has long been a hot spot for both out-of-state buyers—particularly from California—and local residents seeking more affordable living compared to other parts of the U.S.
While demand for homes in Arizona remains strong, there are signs of cautious optimism as the economic climate evolves. Population growth, fueled by migration from states with higher costs of living, continues to drive demand. However, some buyers are hesitating due to the combination of high home prices and rising interest rates.
Interest Rates & Market Impact
Interest rates have been a key factor influencing the Arizona real estate market, as they are across the nation. As of 2025, mortgage rates are still relatively high compared to the historically low rates seen during the pandemic years.
The Federal Reserve’s actions to combat inflation by raising rates have resulted in mortgage rates hovering between 6% and 7% for 30-year fixed loans.
Higher interest rates are contributing to reduced affordability for buyers, especially those in the first-time homebuyer category.
Many buyers are finding that their purchasing power is lower than it would have been in the past.
As a result, they are adjusting expectations when it comes to home size, location, and price.
On the flip side, these higher rates have somewhat cooled the hyper-competitive market seen in earlier years. Buyers are more cautious about overextending themselves, and sellers are becoming more flexible with pricing as the reality of slower sales sets in.
What to Expect for the Rest of 2025
As we look into the latter half of 2025 and beyond, it’s expected that Arizona’s real estate market will continue to grapple with key issues:
Supply and demand will remain a crucial factor, with inventory levels likely staying low in the near term.
Interest rates will play a central role in shaping market activity.
If rates stabilize or decrease, we could see a rebound in buyer activity, though affordability challenges may persist.
What Should Buyers & Sellers Do?
For those looking to buy or sell in Arizona, it’s important to:
Stay informed on market trends and changes.
Work with experienced real estate professionals who can help navigate these shifting conditions.
Understand how supply, demand, and interest rates will impact your decisions.
Whether you’re a first-time homebuyer, a seasoned investor, or a seller looking to cash out, understanding these market dynamics will be key to making informed decisions in the coming months.