Arizona Housing Market Trends and Federal Reserve Rate Cuts
By Garrett Archer, ABC15 Records Analyst
Mortgage Rate Trends
The average 30-year fixed loan rate, according to Freddie Mac, climbed from beneath 4% in 2022 to almost 8% by 2024. This sharp increase was in large part due to interest rate hikes by the Federal Reserve aimed at combating inflation. Despite two recent rate cuts by the Fed, mortgage rates remain stubbornly high at approximately 6.8%, consistent with Freddie Mac.
Historically, such slow responsiveness is not unusual. Since 2004, the Federal Reserve has made three big rate adjustments, yet the 30-year constant mortgage rate has shown limited immediate reaction, with only the last adjustment resulting in a substantial change. Otherwise, the past two decades have seen a gradual decline in interest rates.
Arizona Housing Market Vital Signs
- Median Listing Price: Just under $500,000, down from the previous year.
- Active Listings: 24,000, a significant 37% increase.
- Time on Market: Homes are taking about 54 days to sell, 24% longer than last year.
- Pending Sales: Up 7% compared to last year.
Arizona's Housing Supply Trends
Arizona's housing market has historically lacked stability. The monthly housing supply, a key indicator of market "hotness," dropped from about 4.5 months to under 1 month between 2016 and 2020, reflecting a red-hot market. However, since 2022, the housing supply has steadily risen, indicating a cooling market where homes sell less quickly, and buyers gain negotiating power.
Conclusion
The Arizona housing market remains stalled despite recent Federal Reserve rate cuts. Historically, the state has experienced fluctuating housing supply and demand, making stability elusive. It is likely that additional rate cuts will be necessary to stimulate significant market movement.
With a look inside the numbers, I'm Garrett Archer, ABC15 Arizona.
FAQs
- How have Federal Reserve rate cuts impacted mortgage rates? Despite recent cuts, mortgage rates remain high, showing limited immediate responsiveness.
- What are the current trends in Arizona's housing market? Key trends include a rise in active listings and pending sales but longer times on the market.
- Why is Arizona's housing market considered unstable? The market has experienced fluctuating housing supply and demand over the years, making stability elusive.
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