For many Arizona residents, the cost of financing a home remains a huge obstacle.
According to a new report from the Arizona chapter of the Common Sense Institute, the state’s affordability challenges are constant as the housing market remains trapped between slowing home prices and a deepening supply crisis.
The institute’s report, released May 11, follows an earlier affordability ranking that placed Arizona among the least affordable states in the nation. While prospective buyers may find slightly more breathing room in today’s market compared with the pandemic-era housing frenzy, researchers say the relief masks more fundamental problems tied to underbuilding and weak supply growth.
The numbers
The institute estimated Arizona faced an immediate housing shortfall of 55,992 units in 2025, with a long-term cumulative deficit exceeding 110,000 homes. Despite moderating home prices, the state’s housing inventory remains insufficient to meet demand, particularly in fast-growing metro areas.
Residential construction activity has slowed significantly. Arizona municipalities and counties issued 50,983 residential permits in 2025, down 14% from the previous year and marking the slowest pace of permitting since 2019. At the current construction rate, the institute estimates it would take more than 119 years to close the state’s housing gap.
Researchers say the recent cooling in the market is being driven less by new supply and more by affordability pressures that are discouraging buyers.
Home prices
Average home prices in Arizona fell 2.9% in 2025, and statewide prices have dropped 3.4% since June 2024 — one of the steepest declines in the country during that period. Still, prices remain elevated compared with historical trends.
The average Arizona home now costs approximately $420,900, which the institute's report says is still 11.1% above pre-pandemic pricing patterns.
The institute estimates a household would need an annual income of roughly $87,000 to afford a typical mortgage on an average-priced home without exceeding conventional lending standards.
Affordability
The burden of monthly mortgage payments has risen sharply in recent years.
Arizona households now need to work about 58 hours per month at the average state wage to cover a typical mortgage payment, up from 38 hours in 2019. That shift reflects the combined impact of higher home prices and elevated interest rates, both of which continue to strain household budgets even as the market cools.
The report also found a steep decline in the share of households able to purchase a home. CSI estimates only 42% of Arizona households can currently afford the monthly mortgage payment on an average-priced home without becoming cost-burdened. In 2019, roughly two-thirds of households met that threshold.
As a result, the institute assigned Arizona a preliminary “C-” Housing Report Card grade for 2025, down from a “C+” at the end of 2024. The downgrade reflects worsening construction trends and persistent affordability challenges despite softer home prices.
CSI Arizona directors said the state has moved beyond the explosive price increases seen during the pandemic housing boom, but structural affordability issues remain firmly in place.
Housing affordability has become an increasingly urgent issue across Arizona as population growth, rising borrowing costs and limited inventory reshape the market.
Economists and housing advocates have repeatedly pointed to permitting delays, land-use restrictions and construction costs as barriers to expanding the state’s housing supply quickly enough to keep pace with demand.
Matt Loeschman has had two separate stints at Independent Newsmedia. He began as a reporter covering Peoria and later Surprise from 2000-2009. In 2017, he returned to Arizona and INI as the news editor of the Daily News-Sun (now the Phoenix Independent). He previously covered the Arizona Rattlers of the Indoor Football League for more than a decade.
Community: During high school football season since 2017, he contributes live postgame radio reports to the AzPreps 365 Friday Night Football Wrapup Show. He supports organizations such as Phoenix Children’s, Boys and Girls Clubs of the Valley and the American Cancer Society.
Education: The University of Texas at Austin majoring in Journalism-News and Public Affairs.
Random Fact: He can sing and he has been fortunate to meet many famous people during his journalism career including First Lady Hillary Clinton, King of Country Music George Strait and Oscar-winning actor Matthew McConaughey. Attended all 4 home games of the 2001 World Series.
Hobbies: Watching and playing a wide variety of sports, including golf, tennis, pickleball and softball. Playing PlayStation 5, working out, shopping and reading.
By .png.jpg)
Comments
No comments on this item Please log in to comment by clicking here