PHOENIX — The Phoenix metro's housing market is crawling back from a "massive cooldown" after mortgage rates shot up in 2022. But despite home values reaching new peaks on a national scale, few people want to sell their Valley property, a new Zillow report found.
The average value of homes in the U.S. rose above $350,000 for the first time in history as buyer demand clashed with reluctant sellers, according to the report.
In the Phoenix metro, the average value of a home climbed 1% from May to June, up to $448,032 -- steep, but down 7.2% compared to last year. However, the supply of homes is shrinking.
Across the Valley, there are 48% fewer home listings compared to last year, and the total Zillow inventory is down 24%. Listings are 36% below 2019, the report found.
In one month, newly pending sales fell 5.5% -- down 16% compared to June 2022.
“Home buyers have persisted this spring despite daunting affordability challenges and record-low inventory,” said Jeff Tucker, senior economist at Zillow. “Demand typically begins to ease in the summer, and there are signs that competition is waning, but large price declines are unlikely until more homeowners list their homes for sale.”
"Affordability remains the key to market strength," the report claimed. Lower-priced metro areas posted the largest monthly gains: a distinct contrast to Phoenix's declines. Currently, mortgage rates as high as 6.8% are making it costly for homeowners to borrow money for their next home purchase.
Homeowners could also be waiting for prices to increase after the market's dip last year, the report speculated. As of now, prices in the Valley are below their peak last summer.
“It could be that some homeowners have been waiting until prices set new highs in their market before opting to cash in their chips,” Tucker said.
But there's good news for buyers, the report notes. Listings are lasting 22 days on average in Phoenix. It's a sign that demand is tapering, and competition could cool off for those looking to buy a home.
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