Phoenix, AZ

Phoenix Real Estate Demand Collapses in October

Mark Hake

Phoenix real estate demand has taken a new low, according to a popular local index. Moreover, interest rates nationally have risen to new highs, choking demand and freezing buyers' interest in taking on new mortgages.

The Cromford Report publishes an index for supply and demand for the residential resale market in Greater Phoenix. Today the demand index stands at just 74.2, well below the 100 mark, above which indicates growing demand.
The Cromford Report - 10-09-23Photo byCromford Report

This is down from 81.1 last year, as I wrote in my Sept. 22, 2022, NewsBreak article, "Phoenix Real Estate Is Set To Collapse."
The Cromford Report - 10-7-22Photo byThe Cromford Report

Moreover, this is down from earlier this year when the demand index was at 75.9 as of Jan. 29, 2023. That can be seen in my Jan. 30 NewsBreak article, "Some Don't Believe Goldman Sachs Report that Phoenix Will Experience a 2008 Real Estate Crash."
The Cromford Report - Jan. 29, 2023Photo byThe Cromford Report

Note that the Market index has actually risen. It is now at 138.3, up from 103.1 a year ago.

That largely reflects an increase in prices which so far has not abated. For example, the supply index has actually fallen from 78.9 a year ago in October 2022 to just 53.6 today.

That means there are less people willing to sell their homes. This reduction in supply, despite the lack of buyers (or lower numbers of buyers) has led to an increase in prices.

This coincides with other indices. For example, the S&P Cash-Schiller AZ-Phoenix Home Price index shows a sharp rise in 2023.
S&P Case-Schiller AZ-Phoenix Home Price IndexPhoto byFederal Reserve

That can be seen in the FRED (Federal Reserve Economic Data) chart above.

That effectively means that with higher prices and lower demand transaction volume will be lower. This could potentially lead to significantly lower prices if interest rates do not relent.

Higher Interest Rates

The fact is mortgage rates are now at unbelievably high levels. They are at even higher levels than contemplated at the beginning of the year.

For example, Goldman Sachs predicted in January in their "real estate crash" report that mortgage rates would peak at 6.5% by the end of the year, according to the New York Post.

Today, the national average is 7.88%, according to In fact, Bankrate says that its best rate for a 30-year fixed mortgage is 7.11%. 30-year fixed mortgage ratesPhoto

This shows that rates have actually been rising in the past several months. If this continues, real estate observers can expect to see further decreases in demand and possibly a reduction in prices.

That could quickly lead to a collapse in prices if the market believes that, despite a pause in the Federal Reserve's interest rate hikes, mortgage rates will not come down any time soon.

As a result, weakness in real estate demand for the Phoenix market could continue to surprise analysts and the market.


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Mark R. Hake, CFA, writes articles on national and local news, stocks, and market events at,,, and as well as TalkMarkets.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks and wealth, financial, and economic issues. He previously ran his own hedge fund and investment research firm and is presently Chief Strategy Officer for Foldstar Inc. and

Phoenix, AZ

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