IRVINE AND SILICON VALLEY, CALIF. – November 14, 2017 – Single-family home sales in the Phoenix, Arizona housing market fell 4.3 percent in the second quarter from the same time period one year ago, according to a new report by Ten-X, the nation’s leading online real estate transaction marketplace. The company’s Second Quarter 2017 Economic and Single-Family Housing Market Outlook Report for Phoenix found a strong and resilient market diminish slightly as the homeownership rate fell over the past year to 62 percent, below the national average of about 64 percent.
“The Phoenix housing market remains on a path toward recovery, even though both sales and homeownership rates dipped slightly in the second quarter,” said Ten-X Executive Vice President Rick Sharga. “Affordability may start to become an issue, since home prices continue to increase at a rate much higher than the U.S. average, and in many cases, it’s now less expensive for Phoenix residents to rent than to own a home.”
Existing home sales in Phoenix fell in the second quarter to a seasonally adjusted annual rate (SAAR) of 116,435, or a 4.3 percent year-over-year decline. Inventory of homes for sale in Phoenix fell again to 20,188 on a seasonally adjusted basis, 11.6 percent lower than one year ago. The average time a home sat on the market rose from 48 days in the first quarter to 56 days in the second quarter – yet 58 days is still 10 percent less time than one year ago, when the average time a home spent on the market was well over two months. On a more positive note, housing starts and completions rose sharply in the second quarter by 23.4 percent and 16.5 percent respectively. However, completions were still down 67.4 percent from their prior peak and housing starts were 66.5 percent lower, so oversupply is not yet a concern.
Phoenix home prices continued to outpace the U.S. average with an 8.2 percent year-over-year jump. The median home price stood at $239,427, which is still below pre-recessionary levels, suggesting there is more room for prices to grow. Affordability concerns rose during the second quarter as renting became significantly more affordable than buying.
“At the moment, the Phoenix market remains affordable for most buyers thanks to the strong local economy,” Sharga said. “Moving forward, expected increases in new home construction should add to the inventory of homes for sale and help maintain housing affordability in the region.”
Economic and Demographic Fundamentals
Phoenix’s economy grew again in the second quarter with metro employment at an all-time high. Payrolls increased 1.8 percent from last year while new businesses helped curtail unemployment to about 4 percent, below the U.S. average. Professional/business services and education/healthcare remained Phoenix’s main job drivers, with strong growth in financial services, which saw a 2.7 percent year-over-year gain in workforce.
Phoenix added 93,680 people in 2016, marking a 2.1 percent year-over-year increase, most of which came from net migration. Meanwhile, 25 to 44 year olds were the city’s most popular demographic, followed by minors under 18 years old and people between 45 and 54 years old. Minors aside, people between the ages of 25 and 54 represent the majority of U.S. homebuyers, putting Phoenix in great shape for a continued turnaround story.