October 6 Real Estate Market Update

Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities

This is the most dismal table for sellers we have posted since November 10 last year. All 17 cities have seen their CMI drop over the last month, meaning that power is slipping away from sellers and moving towards buyers.

We do not have to look far to find the most obvious reason - mortgage interest rates. While most pundits predicted rates would fall in the second half of 2023, the shortage of buyers for bonds have caused yields to rise. The typical 30-year fixed mortgage rate is now around 7.7%, up from 7.3% a month ago. Understandably, buyers are far from enthusiastic about this and in some cases fail affordability tests they could once have passed easily.

This is not the whole story however, because supply is now rising at the fastest rate we have seen since last year. A combination of lower demand and higher supply means the average CMI in the table has fallen by 11.2%, well above the 9.4% drop we measured last week and 7.8% two weeks ago.

Well above average declines can be seen in Chandler, Goodyear, Buckeye, Maricopa and Mesa. Falling but at a much lower speed are Fountain Hills, Tempe and Surprise.

13 out of 17 cities are still sellers markets (for now) with Buckeye, Goodyear, Queen Creek and Maricopa in the balanced zone. However these 4 cities are now below the 100 mark implying that buyers have a slight edge in negotiations. On the current trajectory, these 4 could all be confirmed as buyers' markets before the end of the month.

Among the secondary cities, Laveen and Tolleson did manage small increases in their CMI, but the other 10 cities declined like their larger counterparts.