Phoenix's real estate market is shifting, slightly

With pending home sales down 6.7% year over year, Phoenix's real estate market is showing early signs of slowing down. But home prices are still up 21.5% from May 2021.

Driving the news: We keep hearing about a market crash, but so far, local data don't support that.

Yes, but: Monthly data show early signs of a cooler market, even if it's slight.

What's happening: From May 2021 to May 2022, new listings were up about 12% and pending sales were down 6.7%.

• More buyers are holding off as home ownership becomes too expensive.
• This comes after mortgage rates surpassed 5% for the first time in 10 years.
• More sellers are dropping their asking price. There was a 27.4 percentage point increase in price reductions year over year in June, according to Redfin.
• Meanwhile, there was a 13.2 percentage point decrease in homes sold for over asking, per Redfin.

Zoom out: Nationally, mortgage applications were down 24%, and, on average, 6.5% of sellers dropped their asking price each week in June, per Redfin's latest market update.

• In June, national pending home sales were down 13% from this time last year, the largest decline since May 2020, Redfin's report stated.

Be smart: Inventory is still critically low overall, which continues to push home prices up.

What we're watching: New listings and pending sales. If more listings flood the market this summer and buyers don't bite, we could start to see power shift to buyers.

Bottom line: We're not seeing major changes in Phoenix just yet, but we're starting to see early signs of a cooling market.