By Jonathan Eberle |
Arizona’s housing market showed signs of cooling in the second quarter of 2025, but affordability challenges persist, according to a new analysis from the Common Sense Institute (CSI).
CSI’s Q2 Housing Affordability Report highlights a combination of falling home prices, slowing residential permitting, and a continuing housing deficit as factors shaping the state’s housing outlook.
Key findings from the report indicate that Arizona currently faces a housing shortage of 52,846 units, a 6.9% decline from 2024. Analysts say the reduction stems more from weakened buyer demand than from an increase in housing supply.
The average home price in the state remains $426,164—roughly $53,400 (14.3%) above what prices would have been if they had followed pre-pandemic trends. Despite recent price declines, households still need to earn $95,808 annually—or work 64 hours per month at the average wage—to afford a mortgage on the typical home.
The CSI report assigns Arizona a “C-” grade for housing in Q2 2025, noting continued affordability concerns and low permitting levels. Maricopa County maintained its “D” rating, while Pima County improved to a “B.” Residential permitting in Arizona is projected to approve 51,877 units this year, a 12.5% decrease from 2024 and the slowest pace since 2019. Experts note that the state needs between 60,000 and 75,000 new units annually to close the housing gap.
“Arizona’s housing market is cooling, but the relief many hoped for has not materialized,” said Zachary Milne, CSI Senior Economist and Research Analyst. “Prices are still far above pre-pandemic levels, mortgage costs remain burdensome, and new homebuilding is slowing at a time when the state already faces a significant housing deficit. Without a sustained increase in supply, affordability will remain out of reach for too many Arizonans.”
The report concludes that Arizona’s long-term housing challenges are driven by both elevated prices and insufficient construction. While the recent moderation in demand has provided some short-term relief, the underlying supply gap continues to affect affordability across the state.
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
