Metro Phoenix home sales are down, but prices are up.
A short supply of Valley houses for sale is boosting home values. The median home price ticked up $5,000 in April and is expected to be up another $9,000 in May.
Higher interest rates aren’t deterring all buyers. A growing number of new homeowners are tapping less expensive FHA mortgages or getting rate buydowns from motivated sellers.
The forecast is for the trends to continue even during the summer, typically the slowest time for the Phoenix-area housing market.
And mortgage rates could start dipping later this year, according to national economists and market watchers.
“We can expect home prices to continue rising, but the increases will be more moderate,” said Tina Tamboer, Cromford Report senior housing analyst. “This year will be more like 2019 and not like the crazy pace of 2021 and the first half of 2022.”
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During the first half of last year, metro Phoenix’s median home price hit a record $475,000, but as interest rates climbed, prices slipped. The Valley median ended up flat for the year, according to the Arizona Regional Multiple Listing Service.
In 2021, the Phoenix-area median price shot up 28% to $427,000.
In 2019, the median increased 11%.
Home sales, prices and listings
Metro Phoenix’s median home price reached $425,000 in April, according to ARMLS. It’s projected to have climbed to $434,000 in May based on pending sales.
Home sales dropped 12% to 6,535 in April from March.
The number of listings fell 6% in April to 15,958.
In late April and May, the new listings were dropping by 250 a week, reports Cromford. Many Valley homeowners who don’t need to sell are staying out of the market now.
Beating the rates
Average 30-year mortgage rates hovered around 6.35% in April and early May but inched up to 6.6% last week, according to Freddie Mac.
FHA mortgage rates are typically a little lower because they are backed by the federal government and considered less risky. The average rate for an FHA loan is about 6.5%.
And in March, mortgage insurance costs on an FHA loan were cut by almost ⅓ of a percentage point. The move is expected to save borrowers $800 a year, according to the Biden administration.
In April, 1,032 Valley homebuyers tapped FHA mortgages. That’s up from 675 FHA loans a year ago, said Tom Ruff, veteran analyst with ARMLS’ Information Market.
Many sellers are still offering concessions, especially mortgage rate buydowns. About 42% of Phoenix-area home sales came with concessions in mid-May. That compares to 52% in January, according to Cromford.
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