The housing market in Phoenix is facing a surprising downturn, despite the nation's strong GDP growth. This contrast is intriguing and worth exploring further.
According to the Eller's Economic and Business Research Center, Phoenix's housing market is lagging behind the rest of the country. The latest S&P Cotality Case-Shiller report reveals a 1.4% decline in house prices over the year in November, while the national average saw a 1.4% gain. This trend is even more evident when compared to cities like Chicago, New York, and Cleveland, which experienced annual price increases of 5.7%, 5.0%, and 3.4%, respectively. Tampa, on the other hand, continues to struggle with a 13-month streak of declining house prices, falling 3.9% in November.
But here's where it gets controversial: Phoenix is one of eight metro areas reporting year-over-year declines in house prices. This includes cities like Dallas, Denver, Miami, and Seattle. So, what's causing this slowdown in Phoenix's housing market?
Despite this housing market dip, the real gross domestic product (GDP) is on an upward trajectory. The Bureau of Economic Analysis reports an impressive 4.4% annual growth rate for the third quarter of 2025. This is a 0.6% increase from the second quarter. Furthermore, real GDP in the third quarter was revised upwards by 0.1%, primarily due to increased exports and investment, although consumer spending saw a slight decline.
Real GDP growth was not limited to Phoenix; all 50 states and the District of Columbia saw an increase in the third quarter of 2025. Arizona's GDP rose by a healthy 4.6%, just slightly above the national average of 4.4%. Leading sectors contributing to this growth include information, finance and insurance, and professional services.
The employment picture in Arizona is also positive. Total nonfarm employment increased by 24,600 jobs year-over-year in December, with the seasonally adjusted unemployment rate remaining steady at 4.3%. This is slightly lower than the national average of 4.4%. Employment gains were seen across various sectors, with notable increases in Trade, Transportation, Health Care, Leisure & Hospitality, and Financial Activities.
However, not all states are experiencing the same level of economic prosperity. State unemployment rates varied widely in December, with Hawaii and South Dakota boasting the lowest rates at 2.2%. In contrast, the District of Columbia had the highest unemployment rate at 6.7%, followed by California and New Jersey.
Labor turnover in Arizona remained relatively stable in November, according to the U.S. Bureau of Labor Statistics. Job openings rates decreased in seven states, with Alaska, Wyoming, and Montana experiencing the largest decreases. The seasonally adjusted job openings rate in Arizona was 4.2% in November, down from 4.5% in October.
The goods and services trade deficit in November came in at $56.8 billion, a significant increase from the revised $29.2 billion in October. This increase is attributed to a $27.9 billion rise in the goods deficit and a $0.3 billion increase in the service surplus. Year-to-date, the goods and services deficit has increased by 4.1% compared to the same period last year, with exports and imports both rising.
So, while Phoenix's housing market may be cooling, the overall economic picture is positive. But this raises an interesting question: Will the housing market rebound, and if so, when? What factors could influence this rebound? These are questions worth exploring and discussing further. Feel free to share your thoughts and insights in the comments below!
