Market Pulse: What’s Happening in Real Estate Now 1.21.26

As we kick off 2026, the real estate landscape continues to evolve—shaped by shifting interest rates, adjusting home prices, and changing buyer and seller behavior. Whether you’re planning to buy, sell, invest, or simply stay informed, here’s what you need to know about the Phoenix real estate market today and where it may be going in 2026.

 Interest Rates: Buyers Find Some Relief (But Still Elevated)

The biggest story in real estate has been and continues to be mortgage interest rates. After more than two years of very high borrowing costs, the average 30-year fixed mortgage rate in the U.S. today has fallen to about 6.20%, the lowest level in more than three years. This dip has helped to wake up buyer interest, and trigger a slight noticeable uptick in both purchase and refinance applications. While these lower rates are welcome news to buyers, they aren’t yet low enough yet to spur a sense of urgency, especially among first-time purchasers, compared with historical lows in the 3–4% range.

Prices: Adjusting But Still Strong

Phoenix home prices, as usual, are all over the board. Pricing and value are determined at a micro level, and are dependent upon many factors, including supply of available homes in a particular area. Most homes currently on the market are over-priced compared to comps and supply, thus prices are soft. Average days on market is well into the 3-4 month period, meaning there are a lot of homes that have been on the market for 6+ months.

Contrary to what some (mainly on social media) say, there will not be a market crash. The market has been in a consolidation period for much of the past four years, but as soon as interest rates reach a breaking point (5%?), trillions of dollars in pent-up equity will be released, buyers will flood back to the market, and price will begin to move higher again.

 Inventory: More Choices for Buyers

Inventory levels have increased compared to pandemic lows, giving buyers more options and less pressure to compete in bidding wars. This has also caused prices to soften significantly. While supply isn’t abundant, it’s more balanced than in recent years—especially for entry-level homes.

Buying Power & Market Position

For buyers, the current environment offers negotiation leverage and more choices than a year ago. For sellers, pricing strategy matters more than ever—homes that are competitively priced and well-staged continue to attract strong interest. Population growth and job expansion, while slowed compared to five years ago, is still fairly strong enough to support long-term demand, making Phoenix a resilient market compared to many others.

Key Takeaways for Buyers, Sellers & Investors

For buyers, mortgage rates are headed in the right direction, although not as fast as most would like. Buyers right now, especially first-time buyers, are in a situation where buying now under higher-than-optimal interest rates will yield a lower (softer) price point to enter the market. But buyer who wait until interest rates drop further will encounter more competition, resulting in higher prices. We recommend first-time buyers with some money saved for a down payment and good credit get into the market over the next few months, eat the higher-than-desired interest rate for a short period of time (maybe six months), then refinance to a lower rate when it makes sense.

For sellers, proper pricing and staging of your home is key. For most sellers, the price of your home has gone up maybe 2-4% over the past four years, so price your home accordingly. Look at the competition in your specific neighborhood…if there are multiple homes on the market, considering the lack of demand right now, your price will need to be softer. Resist the urge to price your home at what you “think it’s worth,” but rather look at the data objectively.

For investors, it’s a good time to follow the recommendations for buyers above. But rather than simply following the pattern of purchasing a residential property and renting it out, consider buying a home where you can rent out each room to a different tenant. Typically this will yield 30%-50% more cash flow on a monthly basis than renting out the entire home. There’s a bit more work involved (finding 3-4 individuals rather than one family), but the additional revenue makes it worth the effort. And there is a large demand for room rentals in the Phoenix area right now, especially the East Valley. For more information about this, please give us a call. We’d love to discuss this model with you.

If you’re considering a move or a purchase, but are not sure of the right timing or process, we can help! Whether you’re a buyer or a seller, we specialize in figuring out what you want, then walking with you through the entire process. Give us a call to discuss your particular situation.