Phoenix Leads the U.S. in Price Cuts With Buyer's Market Possible
Phoenix isn't a classic buyer's market yet, but it could be later this year.
The Phoenix area real estate market has shifted in a buyer-friendly direction over the past couple of years, and especially within the last six months.
At this rate, we could see a classic buyer's market scenario developing later this year.
The latest evidence comes from a February 2025 Zillow report, which showed that the Phoenix metro area had the highest percentage of price reductions among sellers nationwide.
Phoenix Leads the U.S. in Seller Price Cuts
A recent report from researchers at Zillow showed that the Phoenix-Mesa metropolitan area had the highest percentage of price reductions among the nation's 50 largest metro areas.
To quote their February 2025 report:
"Price cuts are most common in Phoenix, where they're found on 33.5% of listings, Tampa (32.4%), Jacksonville (30.8%), Orlando (29.1%) and Dallas (28.7%)."
Price cuts occur when a home seller lowers the original asking price of a property after it has been listed on the market for a while. It usually happens when a home doesn't attract enough offers at the initial price, or when market conditions favor buyers over sellers.
And it's not just Phoenix experiencing a rise in price cuts. This trend is affecting most of the U.S. in early 2025.
Nationwide, a record high of nearly 23% of listings received price cuts in January of this year, indicating a shift in the real estate market. All of this bodes well for home buyers.
While buyers still face affordability challenges, they have more negotiating power these days, with a record number of listings receiving price reductions.
But It's Not a Buyer's Market, Yet
The Phoenix area housing market has experienced some wild swings over the past five years.
Here's a quick recap of those trends, to bring us up to the present:
During the pandemic years of 2020 - 2022, Phoenix became a strong seller's market due to a surge in home-buying activity.
During the summer of 2022, the real estate scene cooled down due to higher prices and rising mortgage rates.
The Phoenix area dipped into "buyer's market" territory during the fall of 2022, but sales activity ramped up again in 2023.
Now, in early 2025, the Phoenix real estate market is more "neutral" according to analysts, meaning it doesn't strongly favor buyers or sellers.
At this point, there's one factor that could push the needle from a neutral to a buyer's market later in 2025. And that's inventory...
Housing Inventory Has Risen Going Into 2025
Housing market inventory across the U.S. has increased steadily over the past year, with more homes coming onto the market. And this is another area where Phoenix stands out.
According to a January 2025 report from Realtor.com:
"Out of the top 50 metros, Sacramento (+31.7%), Phoenix (+27.3%), and Seattle (+24.7%) experienced the greatest bumps in newly listed homes this month compared with the same time last year."
That same report showed that total active real estate listings within the Phoenix metro area increased by nearly 39% over the past year, giving buyers more options to choose from.
The following graph shows the months of supply for the Phoenix-Mesa metropolitan area going back ten years. It's based on data provided by Redfin in February 2025.
The "months of supply" metric shows how long it would take to sell all homes currently on the market if no new homes were listed. It helps us track inventory levels over time.
A couple of things will jump out at you right away:
You can see how supply levels (homes for sale) plummeted during the COVID pandemic, as the rise of remote work led to a migratory shift and home-buying surge.
You can also see how supply levels in Phoenix have rebounded over the past couple of years, with a relative peak in early 2025.
The bottom line is that the Phoenix real estate market has largely recovered from the pandemic-fueled supply shortage. This helps to explain why the market is shifting to favor buyers.
Phoenix Home Prices Mostly Flat Going Into 2025
Home price trends can also help us determine which way the real estate market leans.
Home prices in the Phoenix area skyrocketed during the pandemic, reaching an all-time high of around $485,000 according to Zillow. It was a strong seller's market back then.
More recently, however, prices have been mostly flat.
According to a February 2025 assessment from Zillow:
"The average Phoenix-Mesa-Scottsdale home value is $449,464, down 0.1% over the past year."
Looking forward, forecasts suggest that home prices in the area will start inching upward again in 2025. But we probably won't see any steep or rapid gains as we did during the pandemic.
This trend also benefits home buyers in Phoenix. Those entering the market over the coming months won't feel as pressured to make a quick purchase due to fast-rising prices.
On the contrary, house hunters in the Phoenix area currently have more time to evaluate the asking price and perform other forms of due diligence, such as inspections.
5 Things to Take Away From All This
Here are the most important points to take away from this week's report:
Phoenix leads in price cuts: A February 2025 Zillow report shows Phoenix has the highest percentage of home price reductions among major U.S. metros.
Not a buyer's market yet: While conditions are becoming more favorable for buyers, Phoenix remains neutral overall. But this could change later this year.
Inventory is rising: Phoenix has experienced one of the biggest increases in home listings nationwide. This gives buyers more options and bargaining power.
Prices are mostly flat: After skyrocketing during the pandemic, home prices in this metro have since stabilized, with minimal change over the past year.
Outlook for 2025: If inventory continues to grow, Phoenix could "officially" become a buyer's market later in 2025.
Disclaimer: This report includes predictions relating to future real estate trends. They're the equivalent of an educated guess and should be treated as such.