The Valley's housing market is teetering on the verge of a buyer's market. But for now, local economists and real estate agents say the market remains balanced.

Resale home prices have been declining since May, said Steve Hensley, advisory manager for Zonda housing research firm.

"We expect that to continue through the end of the year as we are in a period of price discovery," he said. "From a buyer's perspective, it is certainly less competitive than it was a few months to a year ago, but the run-up in mortgage rates has made homes less affordable. Nonetheless, it appears that the market is heading back toward equilibrium, which overall is a good thing."

For 33 consecutive months, Phoenix had led the nation in home price growth, but that growth has slowed so much that the metro has dropped on the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index rankings over the past few months.

For the second month in a row, Phoenix now sits at No. 4 on the Case-Shiller index, showing a 26.6% year-over-year- increase in home price growth in June.

Tampa, Miami and Dallas reported the highest year-over-year gains with 35%, 33% and 28.2% price gains, respectively.

Phoenix home inventory rising

Danny Court, principal, and senior economist for Scottsdale-based Elliott D. Pollack & Co., said Phoenix is trending toward a buyer's market with recent price declines and increased inventory to choose from.

"Prices are still high, but because demand has cooled substantially, sellers are adjusting prices downward," Court said.

Meanwhile, mortgage rates have been trending upward again and pushing closer to 6% than 5%, where it was hovering at the beginning of August — negating home price declines, he said. Some mortgage lenders have started layoffs now that fewer potential homebuyers are looking for financing.

"With weakness on the demand side, we expect that housing prices could continue to decline somewhat through the end of the year, but many sellers are in great financial shape and may choose a different route as opposed to selling at a far lower price, such as..."

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Written by Angela Gonzales  –  Senior Reporter, Phoenix Business Journal.