Amid a cooling housing market, median sale prices in the Valley are dropping by 5% month over month, leaving homebuyers wondering if the market is headed for a crash.

As of July 11, the median sales price dropped to $457,500, down from $480,000 in May, according to The Cromford Report.

"The Arizona housing market is experiencing one of the most rapid reversals in real estate history," said Greg Hague, CEO of Scottsdale-based 72Sold.

"Fast rising interest rates have depressed buyer demand, and a dramatic increase in homes for sale has made buyers more cautious and price sensitive," he said. "This is why the latest stats show the median price of Phoenix metro homes decline by almost 5% in the past two months."

"A period of recalibration is now front and center in the Phoenix housing market," said Steven Hensley, market advisory manager for Zonda.

Pointing to Redfin data, Hensley said the percentage of active listings with price drops reached 44% in June, the highest level experienced in over three years.

Pointing to Redfin data, Hensley said the percentage of active listings with price drops reached 44% in June, the highest level experienced in over three years.

"This suggests that resale home values are already adjusting to demand after rapidly rising interest rates, which began in March, pushed affordability to its brink," Hensley said. "When today’s interest rates are factored in, the typical ratio of monthly payment to local income is now the highest in recent history."

He expects resale home prices to begin to fall moderately through the rest of the year.

The sale price to list price ratio also is declining, he said.

As of July 11, it was 99.3%, up from 101.8% in June 2021, he said.

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