While the Arizona housing market is significantly calmer than it was a year ago, there was a healthy increase in new and pending listings from December to January.

According to the latest data analysis from Phoenix REALTORS®, agents in the Phoenix area entered nearly 7,000 new listings into the Arizona Regional Multiple Listing Service in January, up from just over 4,000 in December. The average sales price also rose by $4,000 month over month.

“The first month of the year saw a rebalance in the real estate market,” Butch Leiber, president of the Phoenix REALTORS® board, said of the findings. “Buyers and sellers alike remained cautious, but pending sales rose as the market saw a greater inventory of homes.”

Inventory has increased by 160.1% from January 2022, when homes flew off the market at unprecedented rates. Inventory is currently at a three-month supply with most homes selling in an average of 76 days. That’s a 10-day increase from December and a 30-day increase year-over-year.

While these numbers seem low compared to the frenzied buying of the pandemic era, Leiber says they are simply a market correction. “Some analysts may feel that the numbers are heading in the wrong direction, but when we take an honest look at the data, there’s a clear indication that the market is rightsizing to more sustainable levels,” he continued. “Given how red-hot Arizona’s real estate market has been in the past few years, most Arizonans — especially newcomers to the state — see a downward spiral instead of the correction we were anticipating.”

Seller concessions are also on the rise in Phoenix. “Prior to the boom years, sellers offered some degree of help to buyers in 35 to 40% of all transactions, which often helped buyers with closing costs,” Leiber said. “Since the shift in the market, we’re seeing more than 50% of all sales including seller concessions — and they’re significant. The median concession is currently over $9,000 — nearly double pre-pandemic amounts.”

Part of the reason seller concessions have increased is the “2-1 buydown” trend, in which the seller helps the buyer lower their interest rate for the first two years of their loan. “This helps immensely with affordability as buyers hope rates will drop during that two-year period, allowing them to refinance at a lower rate,” said Leiber.