Phoenix Metro Update - December 2025

Cromford Report: Optimism Emerges for 2026 Home Sales

As we head toward 2026, new data from The Cromford Report is giving both buyers and sellers in the Greater Phoenix Metro area something we haven’t seen much of in recent years: optimism. Rising incomes, stabilizing mortgage rates, and improving market balance are beginning to align in ways that could positively shape the year ahead.

Let’s break down what this means for buyers and sellers across Maricopa County.

What the Numbers Say About Income Growth

When housing affordability is discussed in the media, median household income is often referenced, but not all household incomes tell the same story.

The U.S. Census separates households into two categories:

• Family households: Two or more people related by blood or marriage
• Non-family households: Individuals living alone or with non-related roommates

This distinction matters. Family household income is a far more accurate measure when evaluating homeownership affordability, while non-family income is more relevant to rental housing.

From 2020 to 2024, Maricopa County experienced significant income growth:

• Median household income increased 33%, from $68,000 to $91,000
• Non-family household income rose from $44,500 to $59,000
• Family household income climbed from $80,000 to $108,000
• Married family income increased from $95,000 to $126,000

This steady rise in income has been a key factor helping the housing market regain its footing.

What This Means for Buyers

The lending industry typically considers 28% of gross income to be an affordable monthly housing payment for many family households in Maricopa County, which translates to a monthly payment of approximately $2,500–$3,000.

With mortgage rates holding steady around 6.25%, that payment range supports:

• Home prices between $350,000 and $500,000
• Roughly 1,500–1,800 square foot single-family homes

In practical terms:

• Homes in the West Valley often fall in the mid-$300,000s
• Homes in the Southeast Valley tend to trend in the mid-$400,000s

Importantly, inventory under $500,000 now represents about 57% of all active listings, up 16% from last year. Combined with stable interest rates over the past four months, buyer demand and confidence are beginning to rise.

Home values haven’t surged recently because they’ve been waiting for incomes to catch up. Now, that gap is closing, setting the stage for stronger activity heading into 2026.

What This Means for Sellers

On the seller side, the fourth quarter of 2025 delivered encouraging momentum.

• November closings were up 3.3% year over year
• When adjusted for one fewer closing day, actual performance was closer to a 9% improvement
• December is continuing the trend, averaging 14 more closings per day compared to last year

If this pace continues, January 2026 could bring increased contract activity—especially as buyers re-enter the market early in the year.

Inventory, Market Shifts & Local Trends

January is traditionally when luxury, retirement, and seasonal community listings hit the market. Broader inventory across all price points typically peaks in March, which often leads to more price reductions depending on overall market balance.

Recent improvements in demand and declining supply are pushing the Cromford Market Index closer to a balanced market.

Here’s how the market is currently shaping up:

• Seller’s Markets: Phoenix, Mesa, Tempe, most Northeast and Southeast Valley cities
• Buyer’s Markets: Queen Creek, Sun Lakes, and many developing outer-edge cities
• Balanced Markets: Peoria (recent shift), Glendale, Avondale, Laveen
• Mixed West Valley: El Mirage (seller’s market), others remain buyer’s markets
• Pinal County: Mostly buyer’s markets, with Apache Junction as an exception

Developing areas are typically the last to recover, while central and established cities tend to lead market shifts—and that pattern is playing out again.

What Sellers Should Expect Next

Even in cities that have shifted back into seller’s markets, don’t expect immediate price spikes. Price appreciation often lags market shifts by up to six months and requires sustained momentum.

What sellers can expect as we move into the Spring buying season:

• Increased showing activity
• Shorter days on market
• Less pressure for price reductions

For well-priced, well-prepared homes, conditions are improving.

Final Thoughts

Rising incomes, steady mortgage rates, and improving market balance are creating a more favorable environment for both buyers and sellers heading into 2026. While challenges remain, the data suggest that Greater Phoenix is moving toward a healthier, more stable housing market.

If you’re considering buying or selling and want to understand how these trends impact your specific neighborhood, I’m happy to help you navigate the market with confidence. Just call Bret Johnson at 602-502-6468 or email me at bret@renetgroup.com

Commentary based on insights written by Tina Tamboer, Senior Housing Analyst with The Cromford Report.
©2025 Cromford Associates LLC and Tamboer Consulting LLC