Valley housing market cools
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About half of all home sellers in the Phoenix area decreased their initial asking prices last month, one of several indicators that the Valley's red-hot housing market is cooling off.
What's happening: In July, 50.1% of home listings dropped their asking prices, compared with 21.7% in July 2021, according to the real estate company Redfin.
- That gives the Valley the eighth-highest share of home listings with price decreases last month out of the top 97 metro areas in the U.S.
- Redfin cited the Phoenix metro area as having the 17th fastest-cooling housing market in the country, based on changes in inventory, price drops and several other factors.
Zoom out: Shauna Pendleton, a Redfin agent in Boise, which led the country in share of house listings with decreased asking price last month at nearly 70%, attributed the trend to unrealistic expectations by home sellers.
- "They priced too high because their neighbor's home sold for an exorbitant price a few months ago, and expected to receive multiple offers the first weekend because they heard stories about that happening," she said in an article on Redfin's website.
By the numbers: The Arizona Commerce Authority (ACA) has seen other signs of a cooling housing market over the past few months.
- From April to July, the Valley's housing inventory saw a massive spike, jumping from 3,970 to 14,095, according to its monthly employment report.
- The Valley saw a similar trend with the median number of days property listings spend on the market, which jumped from a recent low of 23 in April to 30 last month.
Between the lines: Doug Walls, labor market information director with the ACA's Office of Economic Opportunity, tells Axios that the trends were likely due to recent interest rate hikes by the Federal Reserve.
- The Fed increased interest rates by .75% last month, its fourth rate hike of the year.
Of note: Walls says home ownership rates are on the rise and rental vacancy rates are at near-historic lows, indicating that demand for housing is still high.
- "But as interest rates increase, buyers might be holding off to see … if housing does cool off and they can purchase at a lower price, or they might themselves be priced out with the increase in the mortgage rates," Walls tells Axios.