Report: Arizona faces long-term shortage of 110,000 homes
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New home construction in Queen Creek in 2023. Photo: Mario Tama/Getty Images
Arizona has a substantial, immediate demand for more housing, and it's only going to grow in the next few years.
Why it matters: Affordable housing drove massive population growth here for decades, but high prices, high interest rates and a supply crunch have combined to make housing increasingly inaccessible in recent years.
The big picture: Arizona has an immediate need for about 56,000 more housing units and a longer-term shortfall of around 110,000, per a new report from the free-market Common Sense Institute (CSI).
State of play: The "immediate need" largely reflects people who are currently seeking new homes but can't get them, such as those living with roommates or family, renters who want to own and homeowners who want to buy new houses, CSI director of policy and research Glenn Farley told Axios.
- Maricopa County alone has an estimated, immediate need for 34,000 new homes.
Threat level: The immediate need shortfall increased in 2025 after back-to-back years of decreases, per the report.
- Local government permitting spiked in late 2021 and early 2022 due to post-pandemic demand, but has consistently decreased since then, with an especially large drop last year, the report said. It's unclear why, Farley told us.
- Permitting is largely a proxy for homebuilding, with most permits resulting in new homes within a year, per the report.
Yes, but: The state's longer-term deficit dropped by about 7,500, which the report attributed to slowing rates of population growth and larger households.
Arizona's housing situation has gotten better over the past few years, Farley said.
- The worst of the crunch was in 2023 when a combination of high prices and interest rates upended the market, he said.
- Buyers benefitted last year from a 2.9% decrease in prices, per the report.
- "We're better off today than we were last year. We were better off last year than we were in 2022," Farley told Axios, with the caveat that "we're still in a whole different environment" than we were pre-pandemic.
What we're watching: The Arizona Department of Housing expects to release a new Housing Needs Assessment Report within the next few months, spokesperson Dave Cherry told Axios.
- Cherry noted that Gov. Katie Hobbs in 2024 signed legislation requiring cities with at least 30,000 residents to publish a housing needs assessment every five years, and to submit annual housing production and planning data to the state.
- A department report for fiscal year 2022 said the state was short nearly 270,000 housing units, but Cherry said that number is now lower.