Market News August 4, 2023

Q2 2023 Arizona Real Estate Market Update

The following analysis of select counties of the Arizona real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.


Regional Economic Overview

Job growth in Arizona continues to slow. Though the state added 56,800 new jobs over the past 12 months, the annual growth rate of 1.8% is the lowest pace of growth since the pandemic ended. That said, the state’s unemployment rate in May was 3.4%, which was lower than the 3.7% rate we saw at the same time in 2022. Comparing the markets contained in this report to the second quarter of 2022, the Phoenix metro area saw its job base rise 1.9%, or 43,800 positions. The Prescott metro area saw employment rise 1.5%, with the addition of 1,000 new jobs. Unemployment rates suggested that both markets were at full employment. The jobless rate was 3.1% in the Phoenix area and 3.3% in the Prescott area. Both markets saw unemployment fall relative to the same period in 2022.

Arizona Home Sales

In the second quarter of 2023, 18,658 homes sold. This was down 15.1% from the second quarter of 2022, but up a very impressive 24.6% compared to the first quarter of this year.

The growth in quarter-over-quarter sales was more impressive given that average inventory levels in the quarter fell 23.4%.

Sales fell in Maricopa and Pinal counties year over year. However, sales managed to rise 8% in the Prescott market. Compared to the first quarter of this year, sales rose substantially in all three counties. Pinal County led the charge as sales rose 37.1%.

Pending sales rose in Pinal and Yavapai counties but fell in the larger Maricopa County market. This suggests that it might be a challenge to maintain this level of growth into the third quarter of the year.

A graph showing the annual change in home sales by county in Arizona from Q2 2022 to Q2 2023. Yavapai had the least drastic change at 8%, while Pinal had the largest change at -16.2%. Maricopa County came in at -15.2%.

Arizona Home Prices

Sale prices fell an average of 3.8% compared to the second quarter of 2022 but were 7.8% higher than in the first quarter of 2023. The average home sale price was $609,602.

Compared to the first quarter of this year, prices were higher in all counties. Maricopa County saw particularly strong gains, with prices rising an average of 8.6%.

The year-over-year drop in prices was not surprising given that the market was peaking in the second quarter of 2022 due to rapidly rising mortgage rates.

It was interesting to see list prices rise in all markets compared to the first quarter of the year. Tight inventory levels have sellers feeling confident even in the face of significantly higher mortgage rates.

A map showing the real estate home prices percentage changes for various counties in Arizona. Different colors correspond to different tiers of percentage change. Pinal had a percentage change in the -9% to -8.1% range. Yavapai was in the -6% to -5.1% change range. Maricopa County was in the 5%+ range.

A bar graph showing the annual change in home sale prices by county in Arizona from Q2 2022 to Q2 2023. Maricopa County tops the list at -3.3%, while Pinal County had the greatest decline at -8.9%. Yavapai County came in at -5.3%.

Mortgage Rates

Although they were less erratic than the first quarter, mortgage rates unfortunately trended higher and ended the quarter above 7%. This was due to the short debt ceiling impasse, as well as several economic datasets that suggested the U.S. economy was not slowing at the speed required by the Federal Reserve.

While the June employment report showed fewer jobs created than earlier in the year, as well as downward revisions to prior gains, inflation has not sufficiently slowed. Until it does, rates cannot start to trend consistently lower. With the economy not slowing as fast as expected, I have adjusted my forecast: Rates will hold at current levels in third quarter and then start to trend lower through the fall. Although there are sure to be occasional spikes, my model now shows the 30-year fixed rate breaking below 6% next spring.

A bar graph showing the mortgage rates from Q2 2021 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q2 2024. After the 6.79% figure in Q4 2022, 6.35% in Q1 2023, and 6.51% in Q2 2023, he forecasts mortgage rates going to 6.55% in Q3 2023, 6.31% in Q4 2023, 6.03% in Q1 2024, and 5.72% in Q2 2024.

Arizona Days on Market

It took an average of 66 days for a home to sell in the second quarter. This was 40 more days than in the same quarter of 2022, but 5 fewer days than in the first quarter of this year.

Maricopa County was the tightest market in the region, with homes taking an average of 54 days to sell. Homes in Pinal County took the longest time to sell, at 76 days.

All counties contained in this report saw average days on market rise from the same period in 2022. Compared to the first quarter of 2023, market time fell in Maricopa and Pinal counties and rose by two days in Yavapai County.

The greatest fall in market time compared to the first quarter was in Maricopa County, where days on market fell 13 days.

A bar graph showing the days on market by county for homes in Arizona in Q2 2023. Maricopa County had the lowest DOM at 54, while Pinal had the highest at 76. Maricopa County came in at 68 days on market.


This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

Even with mortgage rates well above levels we’ve seen over the past few years, demand for homes still exceeds supply. Given that almost 84% of homeowners with mortgages have an interest rate below 5% and almost a quarter have rates at or below 3%, there is little incentive for them to sell if they don’t have to. This suggests that supply levels are unlikely to improve to a level that meets demand until rates drop significantly. With this supply-demand imbalance, it’s not surprising that home prices are rising again following the decline in the second half of 2022. I expect this trend to continue through the second half of the year.

A speedometer graph indicating a light seller's market in Arizona for Q2 2023.

For the time being, rising list and sale prices, shorter time-on-market, and higher pending and closed sales appear to be offsetting higher mortgage rates. Given these factors, I have moved the needle in favor of sellers. However, it will be interesting to see what the market looks like after the summer lull.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.