By Mike Bodeen · 2 February 2026
Last year, in our projection of the 2025 Phoenix Metro residential real estate market, we wrote that the market could go in three different directions – all based on what was to happen with inflation. Without going too deep, we hit the nail on the head with our “status quo” remark, which was a 3rd option.
The 3rd projected option actually stated what happened in our 2025 market: “a lingering and limping market akin to 2023 and 2024, with no great rise in sales or prices – with many buyers still left out in the cold not being able to afford that first or move-up home.” And that was precisely our story.
2026 has arrived and it’s very tempting to say, “same ole, same ole,” ahead for this next year. Hmm, maybe I should just leave it at that, eh?
“It’s a possibility that even if rates remain where they’re at, buyers may still begin to flood into the market, realizing that current rates are just a sad, but real fact of our local life.”
What I am willing to say is that change is happening, albeit slowly – currently to the benefit of buyers.
Income and inflation are both rising. But not so much with housing prices, presently.
Mortgage rates are decreasing. And if the downward rate trend continues, more buyers will be able and willing to qualify to buy though rates may be in the high 5’s to low 6% range. Psychologically, home buyers are getting used to our current rates and any movement lower encourages buyers to “go for it” even more.
Also, to the benefit of buyers, is that listings are still increasing, (see chart) up 10% from one year ago. This will temporarily hold down current pricing.
The number of homes under contract compared to 2025 are up 2%. This tells us that with rates lowering, more buyers are already entering into the market and not just kicking tires.
Peering into the new year:
If rates and listings can hold steady, sales will hold steady or increase
If rates lower and listings do not accelerate, prices will increase as demand increases
If rates increase, listings will increase
If listings increase prices will lower
There is a wild card which may get played this year. It’s a question that no one is talking about, mostly because no one knows the answer to. And that question is, “what is the amount of pent-up demand to buy in our Phoenix Metro market?”
As mentioned above, buyers are getting more and more used to the current rates of 6%-6.5%. It’s a possibility that even if rates remain where they’re at, buyers may still begin to flood into the market, realizing that current rates are just a sad, but real fact of our local life.
And what’s in store for 2026? Same ole answer we share each year. Only God knows!