Phoenix, Tucson housing markets shift toward buyers - AZ Big Media

Homebuyers in Arizona are experiencing an increase in their negotiating power as the housing market gradually shifts, although rising mortgage rates are complicating affordability, according to a recent report by Realtor.com. The latest Market Clock® report for the third quarter of 2026 indicates that both the Phoenix-Mesa-Chandler and Tucson metropolitan areas are transitioning toward a more balanced market, moving in favor of buyers.

The report assigns both markets a reading of 4 o'clock on the Market Clock, categorizing them as "late balanced, loosening." This designation suggests that while neither buyers nor sellers hold a significant advantage, the conditions are increasingly favorable for buyers. This trend reflects a broader national movement where homebuyers are gaining leverage due to shifts in housing inventory, sales activity, and contract trends.

However, this evolving market also brings challenges. Higher mortgage rates are constraining purchasing power, which may negate some of the advantages that buyers are beginning to enjoy. Nationally, the housing market has moved from a 3 o'clock reading in the second quarter to a 4 o'clock reading in the third quarter, indicating a continued shift towards buyer-friendly conditions.

Of the 99 metropolitan areas evaluated, 27 are still classified as seller’s markets, while 49 are balanced and loosening, and 17 are considered buyer’s markets. This means that approximately two-thirds of the metropolitan areas are either leaning towards buyers or are in a balanced state.

Danielle Hale, chief economist at Realtor.com, explained that the Market Clock tool assists buyers and sellers in understanding their negotiating power by analyzing housing inventory, sales, and contract activity. “It shows how well supply and demand are balanced and how conditions are shifting,” she stated. “The latest reading illustrates that buyers are gaining traction nationally and in numerous markets. However, affordability will likely remain a primary concern for buyers, especially with mortgage rates exceeding 7%, which limits the purchasing capacity for those on a fixed budget.”

For buyers in Arizona, the recent data points to increased opportunities for negotiating prices, closing costs, and other purchase terms, compared to a market dominated by sellers. Nonetheless, the report does not classify Phoenix or Tucson as outright buyer’s markets yet.

As the housing markets in Arizona trend towards favoring buyers, rising mortgage rates present an additional financial obstacle. Realtor.com reported that mortgage rates surged by 74 basis points in just over a month, climbing from 6.66% in late August to 7.40% by October 8. This increase significantly diminishes purchasing power. For instance, a homebuyer with a monthly budget of $2,000 for principal and interest would see their purchasing capacity decrease by 7.2%, which equates to over $22,000 in home value.

The situation results in a market where buyers may have enhanced negotiating leverage, yet their financial capability to purchase a home is diminished. Jake Krimmel, a senior economist at Realtor.com, noted, “While more buyers can negotiate in more markets, a greater negotiating advantage doesn’t necessarily translate to increased affordability. As rates rise, the same monthly budget accommodates a lower home price. Presently, market leverage and purchasing power are moving in opposite directions.”

This distinction is particularly crucial for potential buyers in Phoenix and Tucson, where the ability to negotiate favorable terms does not automatically lead to lower monthly mortgage payments.

The report also outlines significant regional variations across the United States. The Midwest remains the most favorable region for sellers, while the South has the highest concentration of buyer’s markets. Out of the 17 metropolitan areas classified as buyer’s markets, 14 are located in the South. In contrast, three Western metropolitan areas—Bakersfield, California; Colorado Springs, Colorado; and Riverside, California—have entered buyer’s-market territory as of September. Phoenix and Tucson are still classified as transitioning markets, with conditions loosening but not yet reaching the buyer’s-market label. Other major Western markets, such as Denver, Las Vegas, Salt Lake City, and Seattle, share the same 4 o'clock classification as Phoenix and Tucson.

The report indicates that additional metropolitan areas may shift toward favoring buyers as the housing market typically slows down during the fall and winter months. Nationally, 41 metropolitan areas experienced changes in their Market Clock positions during the third quarter, highlighting the rapid evolution of market conditions.

For Arizona, the future trajectory of the housing markets in Phoenix and Tucson remains uncertain, hinging on fluctuations in housing inventory, buyer demand, sales activity, and mortgage rates. For sellers, the changing landscape may lead to increased competition and a necessity for more realistic pricing strategies. For buyers, this could create further opportunities to negotiate favorable terms, especially for homes that have lingered on the market. However, the overarching challenge of affordability persists. With mortgage rates remaining above 7% in the October report, even those who successfully negotiate lower prices may find that financing costs restrict their options. Ultimately, while Phoenix and Tucson are becoming increasingly accommodating to homebuyers, the high borrowing costs mean that enhanced negotiating power may not lead to improved affordability.