If Homes Are Taking Longer to Sell, Why Are Prices Still High?

If you've been watching the Phoenix housing market lately, you might be scratching your head. You're seeing more "For Sale" signs staying up longer, yet home prices refuse to budge much. In fact, the average home price in Metro Phoenix climbed to $495,000 in May 2025, marking a 4% year-over-year increase, even as inventory has surged.

The Simple Economics (With a Twist)

The housing market follows the basic rules of supply and demand.  When supply is high and demand is low, prices should fall. But here's what's different about this market.  Even though inventory has increased, we're starting from a massive deficit. Think of it like a bathtub that's been draining for years. Yes, we've turned on the faucet, but it's going to take a long time to fill back up.  Recent figures estimate the current housing shortage at approximately 2.8 million units nationwide.

Three Big Reasons Prices Haven't Dropped Much

1. The Lock-In Effect
About 80% of homeowners are paying mortgage rates under 6%. With today's rates hovering around 6.5-7%, many who might otherwise sell are choosing to stay put rather than trade their low payment for a much higher one. This keeps inventory from flooding the market.

2. We're Not Actually Oversupplied
Nationally, we have 4.4 months of inventory. Phoenix sits at 3.8 months. A "balanced" market typically has 4-6 months—we're just entering normal territory, not oversupplied. Homes now spend an average of 52 days on the market in Phoenix compared to 38 days a year ago. They're sitting longer, but they're still selling.

3. Sticky Sellers

Many sellers are choosing to delist entirely rather than accept lower offers, pulling inventory back off the market. This 'I'd rather not sell than sell low' mentality further constrains supply and props up prices.

What Does This Mean for You?

If You're Buying:
This is a much better market than recent years. You have more choices, less competition, and real negotiating power. While prices haven't fallen dramatically, you can get better deals than the purchase price suggests.

If You're Selling:
Price it right from the start. Homes that are priced competitively and show well are still selling.  They're just not in bidding wars like 2021-2022.

If You're Waiting for a Crash:
Don't hold your breath. This isn't 2008. We have a supply shortage, not a surplus, and lending standards are much tighter.

The Bottom Line

Houses sitting on the market longer doesn't automatically mean falling prices.  It means the market is normalizing after years of frenzy. Think of it less as a crash and more as a slow deflation of an overinflated balloon.

The market is recalibrating. Inventory is climbing while supply shortages linger. Demand has softened without disappearing entirely. Prices are adapting to this new normal.

For Phoenix specifically, this is actually an opportune time to make a move. The extreme conditions have eased, giving both buyers and sellers a chance to make rational decisions rather than panic-driven ones.

Ready to navigate the Phoenix market? Whether you're buying or selling, understanding these market dynamics can make all the difference. Let's talk about your specific situation and create a strategy that works for you.

Data sources: National Association of Realtors, Zillow, Redfin, Phoenix REALTORS