Arizona homebuyers are gaining negotiating power as the housing market continues to shift, but rising mortgage rates are making it harder to afford a home, according to a new report from Realtor.com.
Both the Phoenix and Tucson metropolitan areas are classified as balanced markets moving toward buyers in the latest the Realtor.com® Market Clock® report for the third quarter of 2026.
The Phoenix-Mesa-Chandler and Tucson markets each received a reading of 4 o’clock on the Market Clock, placing them in the “late balanced, loosening” category. That means neither buyers nor sellers have a decisive advantage, but market conditions are increasingly moving in buyers’ favor.
The findings mirror a national trend in which homebuyers are gaining leverage as housing inventory, sales activity and contract trends shift the balance of power.
However, the changing market comes with a significant catch: Higher mortgage rates are reducing purchasing power, potentially offsetting the benefits of greater negotiating flexibility.
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Arizona buyers gain negotiating power
According to Realtor.com, the national housing market moved from a 3 o’clock reading in the second quarter to 4 o’clock in the third quarter, signaling a continued shift toward buyers.
Of the 99 metropolitan areas analyzed, 27 remain seller’s markets, 49 are balanced and loosening, 17 are buyer’s markets and six are balanced and tightening.
That means roughly two-thirds of metropolitan markets either favor buyers or are moving in that direction.
“The Market Clock tool helps buyers and sellers understand their negotiating power by bringing together housing inventory, sales, and contract activity. It shows how well supply and demand are balanced and how conditions are shifting,” said Danielle Hale, chief economist at Realtor.com.
“The tool gives buyers and sellers a picture of what’s happening now so they can make well-informed decisions in a rapidly changing market. Its latest reading shows buyers gaining ground nationally and in many markets. Even so, affordability is likely to continue as a top concern for shoppers, especially as mortgage rates above 7% limit how much home a fixed budget can buy.”
For Arizona buyers, the latest readings suggest greater opportunities to negotiate prices, closing costs and other purchase terms than in a market dominated by sellers.
But the report does not yet classify Phoenix or Tucson as outright buyer’s markets.
Higher mortgage rates create affordability challenges
While Arizona’s housing markets are moving toward buyers, mortgage rates are creating another financial hurdle.
According to Realtor.com, mortgage rates climbed 74 basis points in just over a month, rising from 6.66% in late August to 7.40% on October 8.
That increase translates into a substantial reduction in purchasing power.
For a homebuyer with a monthly principal-and-interest budget of $2,000, the higher mortgage rate reduces purchasing power by 7.2%, representing more than $22,000 in home value.
The result is a housing market in which buyers may have more negotiating leverage but less money available to purchase a home.
“More buyers can negotiate in more markets, but a bigger negotiating advantage doesn’t always mean more affordability,” said Jake Krimmel, senior economist at Realtor.com. “As rates rise, the same monthly budget supports a lower home price. Market leverage and purchasing power are moving in opposite directions right now.”
That distinction is especially important for prospective buyers in Phoenix and Tucson, where the ability to negotiate a better deal does not necessarily translate into a lower monthly mortgage payment.
Arizona follows broader Western housing trends
The report also highlights significant regional differences across the country.
The Midwest remains the strongest region for sellers, while the South has the greatest concentration of buyer’s markets.
Of the 17 metropolitan areas classified as buyer’s markets, 14 are in the South.
Meanwhile, three Western metropolitan areas — Bakersfield, California; Colorado Springs, Colorado; and Riverside, California — moved into buyer’s-market territory by September.
Phoenix and Tucson remain one step behind those markets, with conditions continuing to loosen but not yet reaching the buyer’s-market designation.
Other major Western markets, including Denver, Las Vegas, Salt Lake City and Seattle, share the same 4 o’clock classification as Phoenix and Tucson.
The changing conditions illustrate how housing markets across the West are adjusting to shifting demand and financing costs.
What comes next for Arizona housing?
The report suggests that additional metropolitan areas could shift toward buyers as the housing market enters the traditionally slower fall and winter seasons.
Nationally, 41 metropolitan areas changed positions on the Market Clock during the third quarter, reflecting how quickly market conditions can evolve.
For Arizona, the next question is whether Phoenix and Tucson will continue moving toward buyers or stabilize in their current balanced positions.
The answer will depend on changes in housing inventory, buyer demand, sales activity and mortgage rates.
For sellers, the changing environment could mean greater competition and a need for more realistic pricing strategies.
For buyers, it could create additional opportunities to negotiate favorable terms, particularly on homes that have spent more time on the market.
Still, the biggest challenge remains affordability.
With mortgage rates above 7% in the report’s October snapshot, even buyers who successfully negotiate lower prices may find that financing costs limit their options.
The bottom line: Phoenix and Tucson are becoming more favorable to homebuyers, but until borrowing costs ease, greater negotiating power may not translate into greater affordability.
