Contract Cancellations Increase | Phoenix Real Estate Market Update

Are buyers getting cold feet out there? Because according to Redfin, more than 50,000 home purchases fell through in the month of March. We're going to take a look at that article. We're going to talk about what's actually going on in Phoenix as well. I also want to share that Arizona made the news for having some of the steepest home price drops in the US. So we're going to take a closer look at that. And if you've not been following what's going on with mortgage rates, things have been shaken up this week. So we'll look at that as well. Thank you for joining me. Welcome back. So this article from Redfin, more than 50,000 home purchase contracts fell through in March. They're saying 13.4% of home sale agreements that went under contract in March were canceled. So this is an increase from last year, which was 12.5%. And that's tied with 2023, which was the highest March on record next to 2020. And we all know what happened in March of 2020. So we'll consider that an outlier. But I wanted to take a look at Phoenix specifically and see, are we seeing these numbers less, more? What does this look like for us? Because I have been sharing every week that it feels like our market here is just not the same spring market we've seen in years past. Just feels a little bit slower. Anecdotal, yes. But I do think some of these things will show in the data. So I looked at Cromford, accepted contracts versus back on market. Now they're measuring these on a weekly basis. So this is how many are accepted, how many go back on market. It's not gonna give us the same type of statistic as the Redfin article, but I just wanted to get an idea of how many went back on market in mid-March. So 376 on March 15th during that week, 376 went back on market. If you take a look at how many were actually under contract that same week going to March 15th, if I can find that here, it was about 9,000. So if we take that 300 number and consider that the number back on market as compared to 9,000, it's about 4%. So we saw in March in Phoenix, about 4% of listings were canceled, went back on market. Why they were canceled, we don't have that information. Whether it was inspection or appraisal or cold feet, change of heart, there's a lot of outs in the contract for buyers in Arizona. So we don't have that information, but we can also see what's going on with the listing success rate. And this is really important for you, not only as a seller, but also as a buyer, because even as a buyer, you can see how likely it is that a listing is actually going to sell in a particular area. So if any of this is helpful for you, you can check the description below to request the listing success rate in your city. Right now, overall, it's standing at about 75%, which is pretty healthy. So back in our early 2020 years, we saw listing success rates up in the 90%, but that is just not what we typically see. We're about 75%, lower than where we were in the last time we were in more of a balanced market back in 2016. So not too far off, but every city is a little bit different. So if you are curious about that for your city, check the description below to request that information. Now, Housing Wire shared an interesting article that I wanted to share with you all as well. Inventory rises as pricing lags in the spring housing market. A timing mismatch is shaping demand across the housing market. Now, what they're talking about here is that we've been seeing housing inventory increase across the US, but we aren't seeing pricing coming down and matching that just yet. So there's kind of this mismatch between inventory rising and prices not quite responding yet. So they're talking about how inventory has been rising. New listings jumped 10% week over week, climbing to 77,919 homes. This is nationally. And seller behavior signals pricing pressure. So about 34% of listings have taken a price cut. Another 8.9% have been relisted, often signaling that initial pricing missed the market. They're also seeing that days on market is increasing. So homes are taking longer to sell. So what they're saying basically is that this is not a demand collapse. It's a timing issue. Buyers are still active, but selective. And I love that sentence because I think that really pinpoints what's going on in the market, especially with what we're seeing here in Phoenix and what we've been experiencing with our clients. There is still demand. Buyers are just very selective because they have enough inventory to choose from and because it's not super cheap. So they want to feel really good about the purchase that they're making. Now, they also call out mortgage rates. They say that this mortgage rates are supporting demand, but they don't drive it. And they're also saying that there is an opportunity here. So in this lag, when inventory rises and pricing remains anchored, a gap forms between seller expectations and buyer behavior. And that's where the negotiations happen. They even call out Phoenix specifically, saying Phoenix is showing similar patterns with more than 48% of homes taking price cuts. And they call out some other areas of the US, Boston, Detroit, seeing faster growth in inventory. So of course, we gotta take a look at what these price changes actually are doing here in Phoenix Metro. So back to Cromford we go. Number of price changes, four week running total. So most recently, the number of listings that took a price cut was 12,565. What does that mean? Well, it means nothing unless you compare to how many active listings there are out there. So taking a look at our active listings chart, we're at about 26,000. So roughly under 50%, about 46% of listings took a price cut. And that is just most recently looking at the last week. Now, did you notice something on this active listings chart? Because we have been looking at this every single week and active listings have always been outpacing last year and all the previous years. But last week we got close. This week, we are under. We are under the number of active listings that we had in 2025 at this time. This is really the first time in the last few years that we've actually seen active listings this year go below what we've been doing in previous years. So if we look back to between 2023 and 2024, 24 started to be a little bit under 23, but then it outpaced 2023. Then when we got into 2025, we certainly outpaced 24. And in 26, we outpaced 25 until today. So although inventory has been climbing and we're talking about inventory climbing and more sellers versus buyers, buyers having choices, sellers taking price cuts, we're seeing the inventory kind of level off. Now the question is, is this going to stay here? Is it going to go lower than last year? These are things we need to keep an eye on, of course, as it relates to demand as well. I just thought, hey, this is something we haven't seen in a while and has been a little bit unexpected for how we've seen inventory growing. So let's talk about how Arizona has made this list of some of the steepest home price decreases in the entire nation. This is a really interesting article because they are saying Arizona among states with steepest home price drops in the US, but they do not specify that they're actually talking about listing prices. They're not talking about sales prices. And while we can assume that a lower listing price is likely going to give a lower sales price, it still is not completed. A list price is a list price. A sales price is what is actually final, right? So they're saying that over the last few months, Arizona's housing market has been healing. Now it's ready to remove its band-aids too. The median listing price of Arizona homes saw one of the largest declines nationwide, according to a study that they used data from realtor.com. The median listing price for an Arizona home dropped $15,470 between the first quarter of 25 and the same quarter of 2026. This is the sixth largest decrease among all 50 states. And they have their chart here. Now, of course, they're talking about Arizona as a whole, not the Phoenix Metro area, but much of what goes on in Arizona is kind of condensed into Phoenix Metro. So I think this is worth a discussion for that reason. If we look at Arizona, they have the median price in Q1 of 26 to be 472,000 and the median price in Q1 of 25. And the change since 2025 being 15,000, the change since 2024 being 28,000. Now, I talked about prices in one of my previous videos and had some really great comments asking about the difference in these price changes with price ranges, which is super valid because there is definitely variance going on in the market. The higher price ranges are seeing different types of appreciation and price changes versus the lower price ranges. So let's take a look by price range, what's going on with prices in Phoenix. So the change in annual average price per square foot by list price range. So this is looking at list prices, not sales prices. So very similar to this article. And this is just Phoenix Metro, not Arizona. So we're not comparing apples to apples, but I'm giving you guys a good idea of what's going on in Phoenix, right? And this is by various price ranges. This, again, is measuring annual average price per square foot. It would likely look different if you're measuring monthly price per square foot or if you're measuring the median home price year to year. There could be some different ways to measure this, but giving you an idea, right? Obviously, these upper end price ranges from 5 million to over 10 million are seeing much more appreciation than other areas or other price ranges. So between 3 and 5 million is actually down 1.5% year over year. 2 to 3 million and 1.5 to 2 million, both are in the positive. And then everything under a million is showing a decrease in year over year average price per square foot. So when you see these articles that are like a blanket statement about all of Arizona or all of Phoenix and prices coming down, it really is dependent upon location and also price range. Luxury, for example, has just taken off in the last few years where the demand in the luxury price ranges is so much higher than it is in the lower end. There's more competition. Homes are actually selling faster, which is usually surprising because the amount of buyers who can purchase a home over $3 million is a much smaller buyer pool than the lower price ranges. So be cautious when you're out there reading articles that are giving those kinds of blanket statements because it really depends on a number of different factors. So let's talk about mortgage rates. I said there were some things going on this week. You might be surprised to see that mortgage rates, ooh, big spike here. We're at 6.5% today. I'm trying to make this a little bit bigger, but over the last day or two, there have been some changes. I'm recording this on Wednesday. You guys are seeing this likely on Thursday. So who knows what could change between now and then. But as of the 27th, we were at about 6.32% and on today, the 29th, 6.5%. So we're back to 6.5%. So what happened? Mortgage rates jumped higher today at the fastest pace in weeks to the highest levels since March 30th. There were two key motivations for the increase, but one accounted for the vast majority of the damage. This is according to Mortgage News Daily. News came out overnight that spoke to the possibility of a prolonged blockade of the Strait of Hormuz. Markets took this seriously because it involved conversations with oil executives to assess the impact of a prolonged blockade on domestic energy markets and fuel prices. So that was one thing that happened. They're also saying the supporting actor in today's rate drama was the Fed announcement. The Fed did not hike rates. Three voters voiced their opposition to the wording of the Fed statement because it tactically implies that the Fed is more inclined to cut rates versus hike them in the near future. So this is what is so interesting about mortgage rates because they are always reacting to news in the markets, whether it's the economy, the Fed, obviously war, all of those things are making an impact on what happens with the bond market and then affects mortgage rates. So these are reasons why you want to kind of keep up with what's going on out there, even though it doesn't always directly impact mortgage rate. But if you are someone looking to buy a home and you're looking at financing, the mortgage rate makes a pretty big difference in what your monthly payment will look like. And if you're looking to sell a home, while mortgage rates are not driving demand, they are a big factor in buyer's decision making. So this type of change can slow down the market a tad or at least affect the amount of maybe showings that you're seeing on your listing. So what's going on with the CMI this week? We're at 82.7, supply is at 107.6 and demand 89. So we haven't had too much change in the last week or so, but supply is outpacing demand. We were talking about that. Demand is getting closer to 90, though. So we have been seeing that creep up ever so slightly. But overall, we're in a buyer's market in the Phoenix metro area. There has been some change month over month to all of these major cities, and it is more in favor of buyers than sellers. Now, that's confusing because I said we're in a buyer's market. What I mean by that is the average change for all of these cities month over month came out to 2.2%. And last week, the month over month change was about 3.1%. So it just softened a little bit for sellers. But if you are in any of these cities, Paradise Valley up to Fountain Hills, you're seeing more of a seller's market environment. If you are any of these cities on the lower end here, Buckeye all the way up to Goodyear, you are seeing more of a buyer's market. And then our balanced market is Peoria and Cave Creek. It can be hard to navigate this market right now because there are certain areas that are doing better than others. And there's a lot of noise out there with what's actually going on in the market when you're looking at it from the national standpoint to just our state or just the Phoenix metro area and then individual cities. So the news you're hearing may not always be applicable to your situation. If you're feeling this way and you're not really sure what to do with your next move, you can schedule a discovery call with our team. We'd be happy to speak with you and talk more about buying or selling in the Phoenix metro area. I appreciate you guys all tuning in. I hope this is helpful and I will see you next week on my next market update.