As Phoenix enters 2026, the housing market is predicted to continue to recover from the whiplash cycles of the early 2020s. Closed sales have risen from their post-pandemic lows, mortgage rates have stabilized enough for buyers to negotiate, and the Valley’s long-stagnant inventory is beginning, slowly, to shift.
Behind the Valley’s stabilizing sales and moderating prices is a regional economy that continues to grow faster than the nation’s. Workforce and migration patterns are being influenced by Phoenix’s transformation into a semiconductor, healthcare and advanced manufacturing hub. At the same time, buyers and sellers are still adjusting to higher borrowing costs, inflation pressures and a tightening consumer mindset.
No longer is the housing market too hot or in correction, it’s recalibrating. The big question, as experts see it, isn’t whether Phoenix will grow. It’s how that growth will interact with affordability constraints, limited supply and consumers who still aren’t sure what to believe about the economy.
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A new kind of stability
For Tina Tamboer, senior housing analyst with the Cromford Report, the past 18 to 24 months hasn’t been a downturn. It’s a normalization.
“When we say it’s a buyer’s market, I don’t want people to freak out. It’s not the kind of buyer’s market we saw in 2008,” Tamboer says. “This is a market where buyers can actually negotiate again. That’s not a bad thing.”
Tamboer tracks the Valley’s demand-to-supply index, where 100 represents balance. Above 110 signals a seller’s market; below 90, leverage tilts toward buyers. As the new year begins, the index sits around 80, a level she describes as “the best buyer opportunity we’ve seen in years.”
The underlying reason isn’t excess inventory like it has been in the past.
“It’s because demand has been so suppressed,” she explains. “We’re not anywhere close to oversupply. Builders aren’t overproducing and existing homeowners are still locked into low rates.”
Nationally, 80% of homeowners hold a mortgage rate below 5%, a structural headwind against listings returning to pre-pandemic norms.
Still, market activity has improved recently. Mortgage rates, which spiked past 7% in 2023, have held in the low 6% range long enough to rebuild buyer confidence. Tamboer notes that stability matters far more than rate drops.
“In January 2025, rates fell dramatically and people didn’t rush in,” Tamboer says. “They wanted to see if rates would keep dropping. It’s not falling rates that matter, it’s stable rates. People move when they feel like the rate they’re getting today will still be there tomorrow.”
Sales have followed suit. Closed transactions have risen from their 2023 trough and pending sales through 2025 moved closer to seasonal norms. Even with these positive factors, buyers still remain wary and cautious.
Segments under $1 million have softened roughly 2%-3%, while certain mid-tier neighborhoods remain down 10%-15% from their pandemic peaks. Condos have struggled where single-family homes now offer more space for similar prices. The luxury segment, which Tamboer notes is now tied more to the stock market than mortgage rates, continues to buoy median sales prices.
And then there’s the return of concessions, a hallmark of the Valley’s new bargaining power dynamic. More than half of transactions between $200,000 and $600,000 include concessions and builders have extended buydowns and closing-cost incentives longer than many expected.
Phoenix’s economy is powering the housing market
Housing, however, is only one slice of Phoenix’s larger economic pie. The region’s ability to avoid a deeper slide during the rate shock of the mid-2020s is tied directly to the strength of its underlying job engines.
For Christine Mackay, president and CEO of Greater Phoenix Economic Council, the story begins more than a decade ago.
“We were a city built on technology: Motorola, aerospace, semiconductors. We drifted away from that in the ’90s,” she says. “But about 10 years ago, the state finally gave cities the tools we needed to compete again, and Phoenix made a deliberate choice to get back to our strengths.”
The impact of that choice is visible across the state.
TSMC’s north Phoenix campus — along with its orbit of semiconductor suppliers — continues to expand hiring in engineering, operations and materials science. Intel’s multibillion-dollar investment in Chandler fuels one of the Valley’s most enduring advanced manufacturing corridors. LG Energy’s facility in Queen Creek is emerging as another gravitational hub for high-wage employment.
Biosciences and healthcare are rising just as quickly. “Mayo is building basically a second campus,” Mackay says. “Downtown Phoenix has become a health and education engine. SkySong is growing faster than we projected.”
Sectors like engineering, healthcare and supply chain technology don’t just bring jobs. They bring high-income jobs. For the housing market, that distinction matters.
“What we’re seeing is not just job growth, it’s wage growth. These companies are bringing the kinds of salaries that support homeownership,” Mackay says.
Migration patterns reinforce the trend with Phoenix continuing to draw young, skilled workers from California, Washington, the Midwest and more recently, New York. Much of the region’s growth, now surpassing 5.2 million residents, is concentrated in Pinal County and the West Valley, where land is more available and development pipelines stay active.
“Our workforce is one of the youngest in the country,” Mackay notes. “We’re retaining our college graduates and we’re attracting highly skilled workers. That’s reshaping our neighborhoods and shaping where housing demand is headed.”
This economic momentum provides a backstop against major housing corrections. As Tamboer puts it: “When you have strong job growth, you’re not going to see a flood of foreclosures. People may not sell, but they don’t have to.”
The structural forces defining 2026
The biggest drivers of Phoenix’s 2026 housing landscape aren’t flashy, they’re structural.
The lock-in effect remains dominant. With most homeowners sitting on rates far below what’s available today, listings remain constrained, even as some sellers re-enter the market.
Construction limitations persist. Labor shortages, higher financing costs, and zoning bottlenecks mean single-family permits remain far below the runaway building of the 2000s. The result is a steady supply deficit that will shape pricing for years.
On the consumer side, however, morale continues to be fragile.
“Consumer confidence is still down. People are scared to make big decisions,” says James Dwiggins, co-CEO of NextHome, Inc. and Rayse, Inc.. “The fundamentals look better than the headlines, but people don’t feel that way. And when consumers are nervous, they hold back.”
Dwiggins notes that inflation and tariffs continue to erode household purchasing power. “It’s not just rates. Everything costs more, groceries, gas, household goods,” he says. “When you feel squeezed every month, even if you technically can buy a home, you don’t want to stretch.”
Together, these forces define a 2026 market where supply remains tight, demand remains uneven, and affordability remains the central question.
The wildcards ahead
If Phoenix’s long-term trajectory looks strong, the short-term path still has variables.
Tamboer points to interest-rate changes as a key short term influence. “By the time you’ve hit the bottom of prices, it’s already gone,” she says. “The buyers who recognize that usually win.”
Dwiggins highlights election-year uncertainty, business investment slowdowns, and consumer sentiment as risks that could shape buyer behavior well into 2026. “If the national economy slows down or consumers get more anxious, even strong markets like Phoenix will feel it,” he says.
The luxury segment remains especially sensitive to stock market swings. A sudden pullback could cool high-end demand and drag median prices down, even if the broader market remains stable.
Even in less optimistic scenarios, however, experts see little evidence of a steep decline.
“We don’t have the supply,” Tamboer says simply. “This is nothing like 2008.”
As 2026 begins, Phoenix stands at a transition point. The chaos of the early-2020s housing cycle has subsided. Economic expansion continues to reshape the region’s job base. Migration flows remain strong. After years of frustration, buyers finally have some room to negotiate.
Whether 2026 turns into a prosperous year or one of prolonged caution will depend on factors beyond the Valley itself: global manufacturing demand, interest-rate policy, consumer sentiment, and the speed of wage growth.
Phoenix is no longer the boom-and-bust housing story it once was.
“This region has reinvented itself,” Mackay says. “The old Phoenix is gone. And the new one is just getting started.”
