See photos and updates from listings directly in your feed
Share your favorite listings with friends and family
Save your search and get new listings directly in your mailbox before everybody else
The latest Consumer Price Index (CPI) data sent a clear message: inflation isn’t done yet.
June’s CPI report showed a 0.3% monthly increase, pushing the annual inflation rate to 2.7%, up from 2.4% in May. Core inflation, which excludes food and energy, also increased, rising 0.2% month-over-month and standing at 2.9% year-over-year. It’s the kind of reading that puts the Federal Reserve on the defensive.
Markets had priced in at least one rate cut this summer. That now looks increasingly unlikely.
The Fed’s Dilemma: Inflation vs. Growth
Federal Reserve Chair Jerome Powell has emphasized the need for “greater confidence” that inflation is headed sustainably toward 2% before cutting rates. June’s CPI data does the opposite. Inflation may still be sticky, particularly in categories such as housing, services, and consumer goods that are affected by tariffs and other trade-related factors.
As a result, the Fed is widely expected to hold the federal funds rate steady at its next meeting, scheduled for later this month. That keeps the benchmark rate at 4.25% to 4.50%—and with it, mortgage rates remain elevated.
This decision isn’t made in a vacuum. Global trade disruptions, tariff-driven price pressures, and ongoing geopolitical uncertainty are prolonging inflation longer than many had anticipated. The Fed knows that cutting rates too soon could reignite price acceleration. So instead, they wait.
No Fed Cut Means No Mortgage Relief—for Now
What does this mean for homebuyers? In short, mortgage rates aren’t coming down just yet.
Today’s average 30-year fixed mortgage rate hovers between 6.8% and 7%, depending on credit scores, loan types, and property-specific details. And with the Fed likely on pause until at least September, any hope for sub-6.5% financing will have to wait.
While these rates are far from the 3% era of 2021, they’re also not expected to rise significantly. However, “higher for longer” is enough to cool homebuyer enthusiasm, especially in markets already facing affordability pressure.
The Arizona Real Estate Picture: Supply Builds, Prices Adjust
Here in Arizona, we’re starting to see the effects play out in real time.
In Metro Phoenix and Scottsdale, active inventory has been gradually rising, not due to a wave of new listings, but because homes are sitting on the market longer. Buyers are cautious, and affordability is top of mind. The number of sold listings in Q2 2025 decreased by 3% from Q2 2024, while the average days on market increased, and price reductions became more common.
At the same time, the average sales price has remained flat year-over-year, despite a slight decline in the cost per square foot. This signals that while sellers haven’t fully capitulated on pricing, the pressure is mounting. If mortgage rates remain elevated through the fall, Arizona could experience a more pronounced correction, particularly in the mid-tier and luxury segments, where rate sensitivity is highest.
For Sellers: Time to Adjust Expectations
If you’re a seller in Arizona, this is a moment to reassess your strategy. Gone are the days of bidding wars and weekend sell-outs. Buyers have more leverage and more options—and they’re using both.
Price positioning is critical. Homes that are priced appropriately, well-presented, and move-in ready continue to sell. However, listings that aim too high or appear poorly are being overlooked, even in desirable zip codes.
Expect longer market times, and be prepared to negotiate on terms, price, or concessions—especially as we move through the hotter summer months into a potentially slower fall.
For Buyers: Opportunity in the Waiting Game
On the other hand, today’s market presents an opportunity for buyers who are ready and able to act.
More inventory means more choices. Fewer competing offers mean less pressure. And while higher rates may impact monthly payments, pricing flexibility and seller incentives (including rate buydowns or closing cost credits) can offset some of the impact.
Savvy buyers are finding deals, and those who can refinance later if rates drop may find long-term upside by locking in a home now, before prices rebound when the Fed eventually pivots.
The Big Picture: What to Watch Next
Three forces will shape the rest of the year for Arizona housing:
- Inflation Data – If CPI moderates in July and August, the Fed could begin cutting rates by fall. That would stimulate demand and re-tighten inventory.
- Tariff Policy – Tariffs on imported goods have added cost pressure across the board. Any easing (or escalation) could sway inflation in either direction.
- Consumer Confidence – Buyers are watching not just interest rates, but also job stability, political headlines, and the cost of living. If confidence falters, housing activity could slow further.
Bottom Line
The June CPI increase reinforces the Fed’s cautious stance and delays the prospect of lower interest rates. For the Arizona housing market, this translates to a pause in buyer momentum, an uptick in available homes, and softening price dynamics. These current market dynamics are crucial for both buyers and sellers to understand and navigate.
It’s a market of contrast: advantage buyers, pressure sellers. For those navigating either side of the transaction, clarity, preparation, and adaptability will be the difference-makers in the months ahead. Being adaptable in the face of changing market conditions is key to success in the Arizona housing market.
