After 200% Increase, Supply Still Nearly 40% Below Normal
- Rates defied industry predictions once again and rose over a point from 5.99% to 7.1% between February 2nd and March 2nd. For the past 4 weeks, rates have hovered in the upper 6% range, figuratively “pinching the hose” on demand during the popular Spring season for buyers.
- At 9,001, contracts are at their 4th lowest count since 2005, the lowest counts were in 2006-2008 and normal range is 11,000-13,000.
- Buyers are not the only ones holding back due to higher mortgage rates, sellers are too. New listings added to the Arizona Regional MLS are the lowest ever recorded going back at least 23 years.
- Typically, active listings should be between 20,000-24,000 to be considered normal. In a nutshell, while higher rates have stunted demand for now, they are not expected to stay high forever. If and when they come down, expect demand to increase again.
- Low-level demand combined with even lower-level supply equals a seller’s market for Greater Phoenix. Not a crazy one like the last 2 years, but since coming out of a buyer’s market last December sale price measures have stopped dropping and have risen a modest 3.5% so far.
- Sellers continued to pay for buyers’ closing costs on 48% of MLS closings in March, with half paying $9,000 or more.
- Fewer new listings hitting the market has meant less pressure on sellers to reduce their list price. As a result, weekly price reductions are actually falling instead of rising as they typically would at this time of year. Only 13-14% of inventory issued a price reduction last week compared to 25% of inventory last October.
- The average negotiation is 97.4% of the last list price this month, an improvement from 96.5% in January and in line with the pre-pandemic market of 2019.
- Most cities in Greater Phoenix are now in seller’s markets. Only 5 cities remain in buyer’s markets at this stage. They are Queen Creek, Maricopa, Buckeye, Casa Grande, and Sun City West. The outskirts of town tend to be the first to enter buyer’s markets and the last to come out.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2023 Cromford Associates LLC and Tamboer Consulting LLC
April 1 market snapshot The Verdes:
Active listings: 20 down from 21
Under contract: 22 up from 17
Sold: 8 up from 5
Days on market: 96 up from 76
Months of Supply: 3.89 down from 4.2
April 1 market snapshot Fountain Hills:
Active listings: 128 down from 144
Under contract: 86 up from 79
Sold: 62 down from 68
Days on market: 77 up from 76
Months of Supply: 2.97 up from 2.95