Phoenix, Tucson housing markets shift toward buyers

For Tucson home shoppers, the housing market is offering more room to negotiate, but not necessarily an easier path to homeownership. Tucson and Phoenix are both moving away from conditions that favored sellers, giving buyers greater leverage on price, closing costs and other terms. At the same time, mortgage rates above 7% in the latest national snapshot are shrinking what buyers can afford each month, limiting the practical benefit of a softer market.

Realtor.com classified both the Tucson and Phoenix metropolitan areas as “late balanced, loosening” in its third quarter 2026 Market Clock report. Each received a reading of 4 o’clock, meaning neither buyers nor sellers have a clear upper hand, although the balance is shifting toward buyers. The designation stops short of calling either metro an outright buyer’s market. For Tucsonans, that suggests buyers may have opportunities to negotiate, especially on homes that have been listed for a longer period, while sellers may need to price properties more realistically and accept stronger competition.

The Arizona trend is part of a broader national shift. Realtor.com’s national reading moved from 3 o’clock in the second quarter to 4 o’clock in the third quarter. Among the 99 metropolitan areas included in the report, 27 remained seller’s markets, 49 were balanced but loosening, 17 were buyer’s markets and six were balanced while tightening. In other words, about two-thirds of the markets either favored buyers or were moving in that direction. Forty-one metropolitan areas changed positions during the quarter, illustrating how quickly inventory, sales and contract activity can alter the negotiating balance.

Local market observations point to buyers already receiving concessions. Redfin reported a median home sale price of $443,611 in Arizona, with interest rates around 6.75%. Sindy Ready, a Phoenix West Valley real estate agent, described the state market as quiet and generally level since 2025. She said buyers are not competing against as many other shoppers and are commonly asking sellers to cover expenses such as closing costs or buyer broker fees. Nearly half of sellers nationwide provided concessions in May, according to Redfin. In Arizona, Ready gave the example of a buyer seeking concessions of 2% to 3% on a $425,000 home, equal to $8,500 to $12,750.

Price reductions are also becoming part of the process. Adam Baugh, a Phoenix land use attorney and partner at Withey Morris Baugh PLC, said very few Arizona homes are selling without first undergoing a price cut. Realtor.com reported that nearly one-third of Phoenix metro listings received a price reduction in April. Baugh characterized the current market as one where buyers can negotiate down the sales price, although Ready said sellers still have meaningful control when a home is priced correctly and kept in good condition. Buyers, she said, are showing less interest in properties that require major remodeling and are prioritizing homes they can occupy without extensive work.

The adjustment has been difficult for some sellers because Arizona’s housing market changed dramatically during the pandemic. Population growth increased demand and created a shortage of available homes, driving prices higher. Zillow data cited in the reporting put Arizona’s average home value at $290,171 in March 2020. That figure reached $465,765 in July 2022 and stood at $424,168 in June 2026, still 46% above the March 2020 level. Baugh said sellers are having to recognize that prices from the COVID era are no longer a reliable guide for today’s market.

Mortgage costs complicate the shift. Realtor.com reported that rates rose from 6.66% in late August to 7.40% on October 8, an increase of 74 basis points in a little more than a month. For a buyer with a monthly principal and interest budget of $2,000, that increase reduced purchasing power by 7.2%, or more than $22,000 in home value. A buyer might negotiate a lower price or ask for help with closing costs, yet still face a monthly payment that is difficult to manage. Realtor.com senior economist Jake Krimmel described negotiating power and purchasing power as moving in opposite directions.

The recent rates also look high compared with the experience of many recent buyers, even though real estate professionals say they are not unusual by longer historical standards. Baugh said the very low rates seen during the Great Recession and the pandemic were exceptions that led people to expect borrowing costs near 3% indefinitely. Federal Reserve Bank of St. Louis data showed rates stayed below 5.1% from September 2009 through May 2022 and reached 2.67% in December 2020. Ready said a rate near 6.75% is not historically extreme, and she expects rates will not fall drastically in the near term.

Affordability is also tied to how quickly new housing can be approved and built in Arizona. Baugh identified the entitlement process, which includes the municipal approvals needed for development, as the state’s largest housing constraint. Getting the necessary paperwork can take one to two years, and each month of delay adds carrying and financing costs that eventually affect home prices. A Common Sense Institute Arizona report said the state is likely to remain short of housing because too few permits are being issued. Baugh argued that Arizona will need more varied options, including condos, townhomes, duplexes, build to rent communities and accessory dwelling units, if it wants to accommodate new residents and attract workers to emerging industries.

For Tucson buyers and sellers, the next phase will depend on inventory, demand, sales activity and mortgage rates as the market moves through the slower fall and winter seasons. Western metros including Denver, Las Vegas, Salt Lake City and Seattle share Tucson’s 4 o’clock status, while Bakersfield, Colorado Springs and Riverside have already moved into buyer’s market territory. Tucson and Phoenix could follow if conditions continue loosening, or they could remain balanced. For now, buyers have more leverage than they did during the pandemic era, but a better negotiating position should not be mistaken for broad affordability.