What Happened in 2025 in Phoenix Real Estate
If you’re wondering what really happened in the Phoenix real estate market in 2025 and where 2026 is heading, you’re not alone. Headlines swung between hype and fear, but the truth is far more nuanced – and far more useful for buyers and sellers making real decisions today. In this year-end review of the Phoenix housing market, we break down what actually happened to home prices, interest rates, inventory, buyer demand, and affordability across single family homes, condos, and townhouses. Using local data and clear trends-not speculation-we’ll look at why prices stayed stable in some segments, fell in others, how declining mortgage rates reshaped buyer behavior, and what these 2025 trends mean as we move into 2026.
Interest rate drops welcomed by buyers
In 2025, declining mortgage ratest significantly improved affordability for buyers in the Phoenix real estate market. The average 30 year fixed mortgage rate fell from 6.91% to 6.15%, a 75 basis point drop that reduced the monthly payment on a $450,000 loan from $2,966 to $2,471 – saving buyers $225 per month, or 7.5%. That reduction in borrowing costs increased the purchasing power, improved debt to income ratios and allowed many Phoenix home buyers to qualify for more favorable financing terms. As mortgage rates declined, mortgage application activity rose, reflecting renewed buyer demand and growing confidence in the housing market. Lower interest rates not only made monthly payments more manageable, but also positioned Phoenix buyers in a stronger financial position heading into the 2026 housing market.
The graph to the left shows how buyers respond to declining interest rates. Mortgage applications increase as buyers see lower costs in their monthly mortgage payment, increasing affordability.
Single Family Homes Stable - Condos Decline
Median single family home prices under 2,000 sq.ft. remained steady for the Phoenix area, and have been for the last 3 years. Combined with declining interest rates this contributes to a more favorable buying environment for would be home buyers.
Condos and townhouse median sales prices have declined by 7% in the last year. This is due in part to increased supply of apartments which compete directly with condos. Declining rental rates have taken away any urgency of potential condo buyers since rents have also decreased in the last year.
Favorable buying environment
To appreciate all the factors contributing to a more favorable purchasing environment, please watch the video above. Mortgage interest rates are down, prices are stable or declining (for condos), seller concessions are higher than has been seen historically, and the purchase to list price percentage is lower than last year. All of the factors point to a much better scenario for serious home buyers.
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