Why 2026 Is Starting to Look Brighter for Phoenix Home Buyers and Sellers.

If you’ve been feeling like the housing market has been stuck in a holding pattern for a while now, you’re not alone and you’re not wrong. But as we head toward the end of 2025, something interesting is starting to shift beneath the surface. While home prices have largely paused and buyers have been waiting for relief, incomes across Maricopa County have been quietly doing the heavy lifting. With household earnings up significantly since 2020, inventory improving under key price points, and mortgage rates holding steadier than many expected, optimism is finally starting to build around what 2026 could bring and it’s showing up first in buyer confidence, showing activity, and early signs of renewed momentum across the Valley, especially in well-priced homes and established neighborhoods. Let’s break down what this really means for buyers and sellers here in the Greater Phoenix market, and why timing and strategy may matter more than ever heading into the new year.

For Buyers

Journalists reporting on housing affordability are frequently quoting sources that reference median household income. Household income can be broken down into two categories, family and non-family households. The US Census defines a family household as two or more people living in a home and related by blood or marriage. Non-family households are all others, including non-related people living as roommates or people living alone. Non-family household income is typically much lower than family income and is more suited for measuring the affordability of rental housing. Family household income is more suited for measuring the affordability of purchasing a home.

From 2020-2024, the median annual household income in Maricopa County rose 33% from $68K to $91K. The non-family median household income rose from $44.5K to $59K. Family income rose from $80K to $108K; and married family income, a subset of family income, rose from $95K to $126K.

The lending industry considers 28% of gross income an affordable monthly payment for mortgage or rent. For a family household that’s roughly a $2,500-$3,000 payment. At a mortgage rate holding steady around 6.25%, that payment supports homes priced between $350,000 and $500,000 in Maricopa County. That budget will support roughly a 1,500-1,800 square foot single family home, which will trend in the mid-$300s in the West Valley, and the mid-$400s in the Southeast Valley.

Incomes are not stagnant in Maricopa County and have been rising at a significant pace since 2020. It’s home values that have been stagnant for 3 years waiting for family incomes to catch up and mortgage rates to decline. Inventory under $500K accounts for roughly 57% of all inventory for sale and is up 16% from last year. With rates holding steady in the low 6% range for the last 4 months, demand and optimism is up for the onset of 2026.

For Sellers

November closings were another success for Q4 2025, up 3.3% from last November, except it was actually better than that. Last November had 19 closing days compared this November with 18 closing days, meaning this year November closed an extra 23 sales per day, putting the improvement at 9% instead of 3%. So far December is also outpacing last year with an extra 14 closings per day on average. If this is a peek into what 2026 may bring, then sellers should be optimistic for contract activity in January.

The big question is how many listings will line up to meet January’s expectation of increased demand. January is typically the top month for luxury, retirement and seasonal community listings to hit the market. However, new listings across all price points and areas often see a peak in March, providing ample selection for Spring buyers. This front-loading of inventory in the first part of the year often results in a rising number of price reductions as well, the level of which depends on whether we enter the year in a buyer’s market, balanced, or seller’s market.

Recent improvements in demand combined with declines in supply are pushing the Cromford Market Index back in the direction towards a balanced state. While Greater Phoenix is still in a buyer’s market overall, central and established cities are becoming the first to move back into seller’s markets. Most recently, Phoenix, Mesa and Tempe shifted back into seller’s markets within the last 30 days, putting nearly all cities in the Northeast and Southeast Valley in seller’s markets, with the exception of buyer’s markets Queen Creek and Sun Lakes. Developing cities on the edges of Metro Phoenix are typically the last ones to pull out of a buyer’s market. Pinal County cities, for example, are buyer’s markets except for Apache Junction, which is a seller’s market. The West Valley is a mix as El Mirage is a small seller’s market and Peoria recently shifted into a balanced market, joining Glendale, Avondale and Laveen. All other West Valley cities are buyer’s markets.

Don’t expect much upward pressure on price in the short term, even if your city has shifted back into a seller’s market. Prices can take up to 6 months to show a response to a shift, which means the seller’s market must be maintained, and many of these cities are still quite weak. What sellers can expect is more showing activity, shorter days on market, and less pressure to reduce their price once the Spring buying season begins.

As we look ahead to 2026, the story of the Phoenix housing market isn’t about sudden price spikes or dramatic shifts, it’s about alignment. Incomes have been rising at a meaningful pace, affordability is slowly improving, and buyer confidence is beginning to return as rates stabilize. For buyers, that means more realistic opportunities in the $350,000–$500,000 range, especially as inventory continues to grow in that space. For sellers, it means demand is no longer missing in action, it’s rebuilding, city by city, and showing up first in stronger, more established areas.

That said, patience and strategy will be key on both sides. We’re not at a point where prices are racing upward, but we are entering a season where homes should see more showings, shorter days on market, and less pressure for constant price reductions, especially as we move into the Spring buying season. Markets tend to turn quietly before they turn loudly, and the recent momentum we’re seeing could be an early signal of a healthier, more balanced year ahead. If this trend holds, 2026 may finally be the year where the market feels less tense and more…normal.

Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2025 Cromford Associates LLC and Tamboer Consulting LLC