Real Estate Market Softens Further for Sellers as Luxury Demand Creates Illusion of Strength

The real estate market continues to trend away from seller-friendly conditions, although the pace of deterioration has slightly slowed. The Cromford® Market Index (CMI) fell by an average of 3.5% over the past month, less negative than last week's 4.1% decline. Only four cities have improved for sellers, consistent with last week, while the remaining thirteen have shifted further in favor of buyers. Cities like Scottsdale, Glendale, Phoenix, Chandler, and Gilbert have shown the steepest declines, while Fountain Hills remains the top-performing city, improving its seller advantage. Maricopa, Goodyear, and Paradise Valley also saw marginal improvements, but not enough to significantly shift their standings.

Currently, only three cities remain in seller’s market territory, and two of those are classified as very weak seller’s markets. Eight cities now fall into balanced market status, while six have entered buyer’s market conditions. This distribution illustrates a market that is broadly shifting away from the red-hot seller’s market experienced in recent years, particularly as key cities continue to post CMI declines.

During May, active supply has stabilized, but only at a level that would be considered healthy if demand were stronger. While a recovery in the stock and crypto markets has stimulated demand in the luxury housing sector, this hasn’t translated to the broader market. The average price per square foot and the median sales price have increased slightly, but this uptick is largely due to a higher volume of luxury sales, not actual price appreciation across the board. In reality, most market segments are not seeing meaningful upward price movement.

Mortgage rates have dipped just below 7%, but it’s unlikely they’ll return to the 5% range that many buyers are hoping for. Builders are stepping in with incentives like interest rate buydowns to keep demand alive, especially for new construction. However, despite these offers, many homebuilders are reporting a spring selling season that has fallen short of expectations. As buyers adjust to a “new normal” for interest rates, sellers must adapt to a slower market where incentives, strategic pricing, and patience play a larger role.