Market Summary for the Beginning of February 2025

Hello…

Here are the basics – the ARMLS numbers for February 1, 2025 compared with February 1, 2024 for all areas & types:

There were 21 working days in both January 2025 and January 2024, so we do not need to make adjustments based on working days.

There is significant bad news for sellers in the active listing counts. An increase of over 12% is the last thing they need, as the limited pool of buyers has plenty of choice already. Last year we saw an increase of only 7%. The good news is that closings were up 5.5% compared to a year ago and under contract listings are down only 0.3%. However sellers would have liked to see stronger growth in listings under contract. They were up 45% over the month of January in 2024 and up only 35% in 2025.

In contrast the news on pricing is deceptively good. The average price per sq. ft. has risen a colossal 8.4% over the past 2 months and 8.8% over the past year. Almost all the annual increase has happened in the last 2 months. This news is accurate mathematically, but needs to be treated with extreme caution. The top end of the market has been on fire over the last 2 months with closed sales up dramatically compared with a year earlier. The higher up the price range you go, the more startling the increase in sales volumes.

We have seen 142 closings of $3 million or more in the last 2 months with an average price of $864 per sq. ft.

In the same period a year ago we saw only 92 closings of $3 million or more with an average price of $801 per sq. ft.

We have seen 35 closings of $6 million or more in the last 2 months with an average price of $1,047 per sq. ft.

In the same period a year ago we saw only 9 closings of $6 million or more with an average price of $1,074 per sq. ft.

Note that

This small number of closings has an out-sized effect on the overall average price for the market as well as the average price per square foot. It has only a tiny effect on the median sales price. In these circumstances the median sales price is a much more accurate indicator of price movements for the bulk of the market. The monthly median sales price has barely moved over the last 3 months. Although it bumped up to $453,500 on Feb 1, it is back down to $450,000 again today.

Although interest rates are off their heights, the key 30-year fixed rate is still a little over 7% and the Federal Reserve has little appetite for further cuts. At this stage, there seems to be more chance that buyers will have to get used to these rates than there is of rates coming down significantly. We therefore expect demand to stay subdued and supply to continue to rise, though perhaps not as strongly as it did in January.

It is good to see the contract ratio move from the 20s into the 30s, with a reading of 33 at the start of February. However this is still very weak compared with the 47.7 we measured on February 1, 2024. The Cromford®Market Index is in a slow falling pattern which is likely to persist during February. There is nothing obvious in the near term to disturb that trend. There is a wide difference in market balance between the cheaper and more far-flung areas of the valley and the more expensive areas closer to Phoenix itself. Meanwhile, the high-end market will continue to be a law unto itself, but it has almost no impact on the market below $1 million. There is no trickle-down effect here. High-end buyers pay little attention to mortgage rates and are influenced more heavily by how their stocks and other investments are performing. If the stock market and/or crypto markets were to cool, then this may take some wind out of the sails for the housing market over $3 million. If they don’t cool then the top-end housing market probably won’t slow down either. We should remember that expensive homes have much more tangible value than many investments that exist only in the digital world, but they are not totally immune to volatility. Cromford Report

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