The Greater Phoenix Area

There was good news for sellers on supply but bad news on demand over the past month. Active listings have stopped the relentless growth that they displayed over the first 4 months of the year. This is largely due to a drop-off in new listings.

The number of listings under contract declined 12% from a month earlier. We were not exactly flush with contracts last month so this result is disappointing. We are also down almost 5% from this time last year.

Mortgage rates remain stuck close to 7%. In time, buyers may get used to it. At least I think this is more likely than 30-year fixed mortgage rates dropping below 6%. Those who really want lower rates are finding the home builders willing to buy down rates for many buyers who qualify for a loan. 4.99% seems to be a common objective.

The balance between supply and demand remains a big problem for sellers. Arizona is not alone in this respect. Florida's market is weaker still and Texas' is unbalanced in favor of buyer's too.

The key for June will be what happens to the new listing flows. If they stay low then this will start to compensate for the weakness in demand. But if they start to move back up, then life could get even harder for sellers than it already is.