The Zillow® September Market Report shows Phoenix home values declining, sales slowing and inventory increasing as elevated mortgage rates continue to challenge affordability.

Phoenix’s housing market continued to cool in September as home values declined, sales slowed and inventory increased, according to Zillow’s latest market report.

The typical home value in the Phoenix metropolitan area fell to $440,821, a 1.1% decrease from September 2025 and a 0.4% decline from August 2026.

Meanwhile, Phoenix-area home sales dropped 5.1% year over year, outpacing the national decline of 2.5%. The number of homes available for sale increased 4.4% compared with September 2025, giving buyers more options in a market still struggling with affordability.

The findings highlight the challenges facing Greater Phoenix’s residential real estate market as mortgage rates remain elevated and prospective buyers reconsider the costs of homeownership.

Mortgage rates put pressure on Phoenix buyers

Nationally, mortgage rates ended September at 7.28%, their highest level since November 2023, according to Freddie Mac.

Although home values have remained relatively stable nationwide, higher borrowing costs are making monthly payments increasingly expensive.

The typical monthly mortgage payment nationally reached $1,922, assuming a 20% down payment and excluding taxes and insurance. That represents a 6.7% increase from a year earlier.

For Phoenix buyers, the combination of elevated mortgage rates and home values exceeding $440,000 continues to create affordability challenges, particularly for first-time homebuyers.

“Buyers on the margins are finding the monthly savings for renting too good to pass up, even if their long-run goal is still to purchase a home,” said Mischa Fisher, chief economist at Zillow.

Fisher said the national slowdown was predictable given current mortgage rates, but the continued strength of the rental market has been more surprising.

Phoenix housing inventory increases

While Phoenix home sales are slowing, the number of available properties is increasing.

Zillow reported that Phoenix-area housing inventory climbed 4.4% year over year in September, compared with a 2.5% increase nationally.

The additional inventory potentially gives buyers greater negotiating power, particularly as properties spend more time on the market.

Across the country, homes took a median of 29 days to go pending in September, two days longer than a year earlier.

Price reductions also became more common. Nationally, 27.4% of active listings experienced a price cut, compared with 26.2% in September 2025.

The growing inventory and slower sales suggest that sellers in Phoenix may need to adjust pricing expectations to attract buyers facing higher financing costs.

Phoenix rents remain relatively stable

While the for-sale market struggles, Phoenix’s rental market is showing more modest changes.

The typical monthly rent in the Phoenix metropolitan area reached $1,720 in September, according to Zillow’s Observed Rent Index.

That represents a 1% increase from a year earlier and a 0.1% increase from August.

Phoenix’s rental growth remains below the national average, where typical rents increased 2.7% year over year to $1,932.

The difference suggests that Phoenix renters are experiencing less upward pressure on housing costs than renters in many other major metropolitan areas.

Nationally, 39.6% of rental listings on Zillow offered concessions in September, up from 37.4% a year earlier.

What comes next for Phoenix housing?

Zillow expects national home sales to remain below year-earlier levels through the fourth quarter of 2026, although changes in mortgage rates could influence buyer activity.

“We expect sales to remain lower than last year through the fourth quarter,” Fisher said. “However, it’s not out of the question that rates will decline as rapidly as they rose, which would bring both buyers and sellers back to the market.”

For Phoenix, the September figures illustrate a housing market adjusting to a new reality: More homes are available, prices are softening and buyers remain cautious.

Whether those conditions translate into stronger sales will depend heavily on mortgage rates, affordability and consumer confidence heading into 2027.