Metro Phoenix median home price poised to drop nearly $20K in November
Metro Phoenix home prices dipped as the number of sales dropped in October, but a bigger slide for the area’s housing market is expected in November.
The Valley’s median home price slipped $1,000 last month to $438,000, according to the Arizona Regional Multiple Listing Service.
But the median home price in the Phoenix area is on track to drop to $419,000 in November, based on pending sales.
That’s down almost 12% from the $475,000 record hit in May.
Higher mortgage rates and affordability concerns are the main reasons home sales are slowing and prices are falling, said housing analyst Tom Ruff with The Information Market, a division of ARMLS.
The average 30-year mortgage rate was 7.1% at the beginning of the month, more than double January’s rate of 3.2%, according to Freddie Mac.
The rate on a typical home loan has dipped a bit to 6.6%, according to a weekly survey. But the payment on a $400,000 home loan is still $800 higher than it was at the beginning of the year.
“Mortgage rates continue to hover around 7%, as the dynamics of a once-hot housing market have faded considerably,” said Sam Khater, Freddie Mac’s chief economist. “Unsure buyers navigating an unpredictable landscape keeps demand declining while other potential buyers remain sidelined from an affordability standpoint.”
He said recent increases in interest rates “will certainly inject additional lead into the heels of the housing market.”
Home sales, prices and listings
Sales of metro Phoenix houses fell to 5,313 in October, down 16% from September, reports ARMLS.2022 home sales are down 36.6%, compared to the first 10 months of 2021.
Valley home prices are down from May but are still up nearly 5% from October 2021.
The number of houses listed for sale in the Phoenix area climbed to 22,800 last month, nearly double from a year ago.
Last month, it took an average of 54 days to sell a Valley house. That compares to 31 days in October last year.
“Most cities in greater Phoenix succumbed to a buyer’s market, as 44% of October sales involved a seller-paid concession to the buyer,” said Tina Tamboer, Cromford Report senior housing analyst.
She said the median concession sellers were giving to buyers was $7,400 in October but climbed to $9,000 this month.
What’s next for homebuyers and sellers
The housing market’s slowdown isn’t done.
“We are seeing a significant year-over-year decline in the housing market with fewer sales and more cancellations,” said Ruff.
Metro Phoenix’s median price is on track to fall below November 2021’s price, which means buyers who purchased during the past year lost most of the equity they built up. The median a year ago was $424,000.
Ruff said that based on pending sales, home closings in 2022 could fall as much as 50% from 2021’s pace.
Though many buyers would be happy to see a crash so they can afford a house with today’s high interest rates, housing analysts aren’t expecting that to happen.
Tamboer said November and December are typically slower for the Phoenix-area housing market, but sales pick back up from January through April.
A drop in mortgage rates could give the market a big boost.