G’day
One of the more confusing things in housing right now is this: oil prices have come down, but mortgage rates have not followed them lower.
At first glance, that feels backwards. If oil drops, most people naturally think inflation pressure should cool and mortgage rates should ease too. But that is not what has happened. The reason is that mortgage rates are not taking their lead from oil alone. They are taking their lead from the 10-year Treasury yield, and the 10-year yield is still being shaped much more by the Federal Reserve, firm labor data, and sticky core inflation than by falling oil prices on their own.
That is really the backdrop to this week’s market.
In this issue:
📰 Housing Market News: Oil price has dropped, mortgage rates drop slightly, and Phoenix is adjusting to the reality of that.
🌵 Phoenix market: Still moving, slowly but surely.
📉 Mortgage rates: Still too high to feel comfortable, even with oil prices down.
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Note: Rates vary based on credit score, down payment and other factors.
The conflict with Iran appears to be winding down (maybe/hopefully), and oil has fallen back sharply. That is good news. But the Fed has not yet stepped in and clearly softened its tone. Earlier this year, the market was talking about rate cuts. Now, those cuts are off the table for the moment, and the tone has become much more cautious. Until the Fed helps guide the market in a different direction, the 10-year yield is staying elevated, and mortgage rates are staying uncomfortable.
That matters nationally, and it matters here in Phoenix.
The clearest Phoenix picture right now is that the market looks slower and more selective. Sales are still happening. Recent city-level numbers show Phoenix home prices around $464,000 on sales, with homes taking about 51 days to sell and roughly 4,801 homes sold in May, up from 4,546 a year earlier. That says demand is still there. It just is not frantic.
At the same time, the listing side of the market is showing more buyer leverage. Median listing price in Phoenix was about $475,000 in May, down 7.8% from a year ago, and around 30.6% of active listings had already cut price. That tells you buyers are still active, but they are also more selective, more price-sensitive, and more willing to push back when the value does not feel obvious.
Inventory is sitting near the high end of the past year’s range, which means buyers have more choice than they did during the frenzy. Sold days on market are still elevated, even though they have improved from the winter peak. Sale-to-original-list-price ratio is sitting around the mid-95% range, which says homes are selling, but sellers are negotiating to get there. Prices are holding in a fairly steady range, but they are not running away.
Put all that together and the story becomes pretty clear.
Phoenix is not frozen in the middle of summer, It is just behaving like a market where financing costs still matter a lot.
That is why this feels like a market of hesitation more than panic. Buyers are not disappearing. They are just taking more time, doing more math, and getting more selective. Sellers are not stuck with no options. They just have less room to miss on price, condition, or positioning. Homes that feel sharp still move. Homes that feel aspirational get challenged faster.
That is also why the frustration around mortgage rates is real. A lot of people expected relief as oil came down. Instead, the market is being told that labor is still firm, inflation is still too warm, and the Fed is still not ready to sound friendly. So for now, rates are staying where they are for a reason, even if that reason does not feel very satisfying to the housing industry.
My take: Phoenix is plodding along, but with less emotion and more negotiation. Buyers still have leverage in many parts of the market, sellers can still get sold, and the homes that do best are the ones that meet the market where it is instead of where people wish it was.
Chris’ Market Trend: Phoenix is in a buyers market.
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