Record Phoenix Home Prices: Why Price Per Square Foot Just Spiked Past $318

The average price per square foot in Greater Phoenix just hit a record high of $318.38, up from $296.87. While this figure reflects only one week of closings, it’s still based on 1,243 transactions, which is enough to flag a real trend. So what’s driving this sudden spike in $/SF? Surprisingly, sales pricing is holding up better in Q4 than in Q3. But more importantly, we’re seeing a clear shift in the transaction mix, fewer sales at the entry level, and more in the high-end and luxury segments.

Homes priced under $500K saw daily closings drop from 161 to 128 per day. In contrast, homes over $1.5M increased from 13 to 17 per day. That matters because luxury homes often exceed $1,000/sf, and those sales push the average way up. If you filter the data to include only homes under $500K, the chart looks very different. That segment has been trending lower since June 2024, with only a mild bounce the past 3 months.

That sub-$500K category is still more than half the market, since the current median price is $450,000. And here’s the real story: even though interest rates remain high, affordability at the entry level is improving. Prices have come down in many neighborhoods, and incomes are rising, which is quietly opening the door for first-time and modest-income buyers to reenter the market. That could be the key driver behind rising demand.

In the first week of December, the $/SF breakdown by segment was: $224.14 for homes ≤ $500K, $307.87 for $500K–$1.5M, and $642.86 for $1.5M+. Expect these distortions to settle by month-end, when a wave of lower-priced homes typically closes. But for now, the market optics are skewed upward not because homes are getting more expensive, but because more expensive homes are selling.

"My definition of being properly educated is being right when the professor is wrong.”
-Charlie Munger

Have a great week, everyone!