Following the recent election, mortgage rates have climbed despite expectations that the Federal Reserve will soon cut interest rates. As of today, the 30-year fixed mortgage rate stands at 7.13%, compared to 6.62% a month ago and 6.25% two months prior. Higher borrowing costs are dampening buyer demand, adding pressure for sellers as they contend with an increasing supply of homes, the highest level since 2016.
Current Supply and Demand Landscape
Active listings in the Phoenix market have reached a peak range, hovering between 21,400 and 21,500, with no signs of exceeding this count before 2025. This is a significant increase, up 40% from last year, giving buyers more options and more room for negotiation. At the start of November, the ARMLS data reveals that active listings without a contract hit 21,368 compared to 15,247 one year ago, marking an 8.8% rise from last month alone.
On the demand side, pending listings rose by 6.8% year-over-year but are down slightly from the previous month. The monthly sales volume in October climbed by nearly 12% compared to last year, though the increase partly reflects October’s extra business days.
Foreclosures on the Rise
In October, Maricopa County recorded 416 Notices of Trustee Sale, the highest since February 2020. While this figure is low by pre-2020 standards, it marks a clear upward trend. Additionally, 55 foreclosure auctions took place in October, also a post-pandemic high. Notably, a significant portion of these foreclosures involves hard money loans. High interest rates on these loans, typically used by fix-and-flip investors, can prompt borrowers to default when the market becomes challenging.
Market Metrics and Buyer Leverage
Here’s a snapshot of the market as of November 1, 2024, compared with the same date in 2023:
- Active Listings: 21,368 (up 40% from last year)
- Pending Listings: 4,349 (up 6.8% from last year)
- Monthly Sales: 5,826 (up 11.9% from last year)
- Median Sales Price: $450,000 (up 3.4% from last year)
These figures highlight that demand has slightly improved, yet it’s not the substantial upswing sellers had hoped for. Rising mortgage rates are creating a tempered demand environment, while increased supply favors buyers, granting them a strong negotiating position.
Looking Ahead
As we move through the final months of the year, sellers may need to adjust expectations as buyers gain negotiating power, and those looking to enter the market should stay informed on both demand and supply trends. With inventory at its highest since 2016 and interest rates elevated, strategic pricing and thoughtful concessions may be necessary to close deals in today’s market.
