Market Update September 2026

Housing Market Stall

The housing market has been a slow moving one – with little to warrant headlines.  Not so of late in the mortgage market.  Rates all summer were in the in mid-6 % range only to suddenly rise to 7.24%. A case of real estate déjà vu, reminiscent of the 2022–23 market, when the rate shock brought our market to a standstill. It’s not just the interest rate that affects demand, but also the suddenness or speed of the change.  Human nature seems to dislike rapid change as a general rule and this most certainly applies to finance.  Buyers typically pause when the rate is actively changing – whether up or down.  As the Cromford Report points out:

“Home values didn’t crash in 2023 or 2024 when rates were routinely over 7.25%, and market indicators do not support a crash in 2026. However, they may glide with less demand….This pause provides a window of opportunity for those buyers who can shoulder a higher payment temporarily and negotiate a better deal on the price or terms of their purchase. When rates decline again, they may refinance their home and enjoy a lower payment.

Those who purchased in 2023 at 8% in October were able to refinance at 6.6% by December, or 6.1% by September 2024. Rates increased to 7.25% by January 2025, and those buyers were able to refinance to 6.1% by September. As a rule of thumb, every 1% change in mortgage rate equates to roughly a 10% difference on the principal and interest payment.

…Buyers who can shoulder the higher rate can negotiate better terms on the home they want today, and get the payment they want when rates decline in the future.

As we have mentioned so often, the exception is the luxury market which continues to remain strong and unaffected by interest rates.

… the luxury market over $1.5M continues to be strong with August sales up 15% over last year. More specifically, sales over $3M were up 59% in August with 62 closings compared to 39 last year. Luxury buyers do not rely on mortgage rates; instead, they are influenced primarily by stock market performance and corporate profits. Corporate profits hit another record in Q1 this year and the stock market has remained resilient through the year.

Buyers who can overcome fear and inertia, will likely score a great value on a home when other buyers flee to the sidelines.  Sellers who focus on attractive pricing and concessions to assist buyers in buying down the interest rates, will secure the attention of those buyers.

Want an opinion on your specific home?  We will happily do a supply/demand analysis and show you how to win in today’s market.

Russell & Wendy Shaw

(Mostly Wendy)

Valley Real Estate

Valley Real Estate: Stuck in the “Meh” Zone

The valley’s real estate market is markedly different today from the fast-moving market that characterized the early 2020s. After years of strong demand, rapidly rising prices, and intense competition among buyers, the market for the last few years has experienced a more balanced and measured period. In fact, the shifts are so slow it feels stagnant. Higher mortgage rates, increased housing inventory, and affordability concerns have kept a lid on demand thereby giving those buyers in the market more negotiating power. Yet, Phoenix remains an attractive destination for people seeking employment opportunities, relatively favorable taxes, and a warm climate. These competing forces have produced a market that is neither in a major boom nor experiencing a dramatic collapse.  For those who remember the market collapse in 2007, there are things worse than a boring marketplace. 

The end of summer often produces a lull in housing activity that rebounds in fall.  We anticipate seeing that again this year as the luxury market goes flat in summer and begins to revive as the heat abates.  Make no mistake, we are seeing two markets having two very different experiences.  The first marketplace, the sub-luxury, is responding poorly to the spike in interest rates.  Demand predictably softens when rates exceed 7%.  Properties that are priced realistically still attract buyers, but homes that are significantly overpriced may remain on the market for weeks or months. Sellers competing in this price point need to return to the basics.   The selling formula remains unchanged: correct pricing (especially important in the first 3 weeks on market), making the necessary staging and repairs, a willingness to contribute to buyer concessions to buy down the interest rate, and leaning in to their agent’s marketing and negotiation advice.  Sellers may also need patience. A property taking several weeks to sell does not necessarily indicate a problem with the home; it reflects a market in which buyers have more choices and greater bargaining power.

Not shockingly, this sub-luxury market has seen an erosion of prices and little price growth. The median price of a home in Phoenix is approximately $450,000, with prices showing relatively little year-over-year movement. This stability is a major change from the extraordinary appreciation experienced during the pandemic. During that period, historically low mortgage rates and strong demand caused buyers to compete aggressively for a limited number of properties. Multiple-offer situations and offers substantially above asking price became common. In 2026, buyers facing minimal competition generally have more time to evaluate properties and are less likely to feel pressured into making an immediate decision much to sellers’ disappointment.

Mortgage rates continue to be one of the largest challenges facing most of the Phoenix housing market. Although 7% is considerably below some historical mortgage-rate peaks, it is substantially higher than the exceptionally low rates available during the pandemic. The difference has a powerful effect on monthly payments causing potential buyers to be cautious about purchasing (suppressing demand).  Thankfully this has been largely counterbalanced by existing homeowners with very low mortgage rates having little incentive to sell (suppressing supply).

The rental market also influences Phoenix real estate. Substantial new apartment construction has increased the supply of rental housing in many areas. This increased rental supply has kept the cost of renting stable. When renting is cheaper than buying, many would be renters stay renters rather than transitioning to home ownership. 

Now on to the luxury market.  It has been thriving courtesy of the stock market, and unlike the sub-luxury market, interest rates are largely irrelevant. While activity in the summer is minimal for the high end (anyone who can escape the heat typically does) we expect a jump in activity with cooling temperatures.  When looking at the contrast in the two markets, the Cromford Report shares this:

“The under-$2M market is down over 10% from its May 2022 high, the same as every “normal” region we looked at above. But the $2M+ tier is up nearly 5% since May 2022, and still only 6.5% off an all-time high it set two months ago. Two completely different markets, moving in opposite directions….

One more data point is crucial: the $2M+ tier isn’t just holding its price better, it’s also transacting more often. Monthly closings in that segment averaged 115 a month in 2022; year-to-date in 2026 that’s up to 178 a month, a 55% increase in volume. Whatever is happening at the top of the market, it isn’t a shrinking pool of buyers propping up a thin, illiquid segment. More buyers are showing up for it than three years ago. We presume they are using profits from the stock market or exercising their stock options and, probably wisely, diversifying into some rather nice real estate. “

Overall, the Valley’s real estate market can best be described as moderately buyer-friendly. Looking ahead, the direction of mortgage rates will probably remain one of the most important variables for Phoenix real estate. If rates decline meaningfully, some buyers who have postponed purchasing could return to the market, increasing demand. If rates remain elevated, affordability pressures are likely to continue restraining demand. Whatever happens, we will continue to report it.

Wondering about your specific neighborhood?  Contact us for a no-cost evaluation.

Russell & Wendy Shaw

(mostly Wendy)

.