Surprising Trends In The Valley Housing Market in July 2023

July is here and summer is well and truly underway! The latest ARMLS numbers show a decline in several key indicators compared to the same period last year.

Latest Numbers

Active listings, excluding UCB and CCBS, have decreased by 20% from last year, with a 1.6% drop from last month. Including UCB and CCBS, active listings have experienced a 16% decrease compared to last year, and a 4.4% decrease from last month.

Pending listings are down by 13% compared to the previous year, and 12% from last month. Under contract listings, including pending, CCBS, and UCB properties, have seen an 8.9% decline compared to last year, and a 13% decrease from last month.

Monthly sales have also declined, with a 9.1% decrease from last year and a 9.0% decrease from last month. The average sales price per square foot has decreased by 4.2% compared to last year but showed a 1.5% increase from the previous month. The median sales price has seen a 6.6% decrease compared to last year but a 2.1% increase from last month.

Interest Rates

The market is currently characterized by low demand and even lower supply. With fixed interest rates around 7%, homeowners are hesitant to sell, and buyers are struggling to qualify and afford homes. Buyers are increasingly turning to new construction homes due to the limited inventory of re-sale homes. Developers are benefiting from strong orders and firmer prices, but they also face challenges with low inventory and a weak pipeline for new permits.

While interest rates play a role, the balance between supply and demand ultimately determines price movements. Currently, supply is weaker than demand, leading to price increases since January.

Rising prices may be reassuring for homeowners but pose challenges for agents due to low transaction volume. We are experiencing a shortage of new listings, and closings are declining as we enter the summer season. Various industry professionals, including title companies, lenders, warranty providers, inspectors, and appraisers, are facing the impact of reduced transaction volume.

Considering the current interest rates, it is unlikely that we will see significant improvement. In fact, rising prices may make it harder for buyers to close on a home. However, if interest rates were to fall to 6% or below, we could anticipate increased demand and improved supply.

Where we're heading next

We are on track to surpass last year's average price per square foot for closings. The gap is currently 4.2%, and we have seen a rise of almost 3% in just two months. While the third quarter is typically weak in terms of average pricing, even if prices remain flat for the next three months, annual appreciation is expected to turn positive by the end of the quarter.

As your Scottsdale realtor, me and my team are always here if you have any real estate questions or would like to buy or sell a home in the valley. Get in touch with us today!