Valley home prices have skyrocketed by nearly one-third in the past year as a growing shortage of units for sale keeps boosting housing values.
Median sales prices were 32 percent higher in May compared with a year ago, according to the W.P. Carey School of Business at Arizona State University. Prices were up 9 percent since April, $147,000.
The recent trend of soaring prices is likely to end as summer settles in as people are less willing to move in 110-degree temperatures, said Mike Orr, a real estate expert at ASU.
“We’ll still see a pretty healthy transaction rate, but I think we’ve got to let people catch up a little bit on pricing and it wouldn’t surprise me if we went sideways on pricing for a month or two,” Orr said. “After all, there is a limit.”
The number of homes on the market dropped to an unusually low 8,550 on June 1. That’s down 50 percent in one year. The tight supply has led to bidding wars and buyers getting flooded with offers.
One Chandler home garnered 84 offers and a house in Glendale had 95 — only to sell for 17 percent higher than the asking price.
“If I was in the business of trying to buy a house, I’d focus on going to a new subdivision,” Orr said.
The East Valley remained the hottest portion of the market for new homes. Gilbert held the record with 187 houses, followed by Chandler’s 49 and Mesa’s 49. Phoenix logged 60 new homes in May.
However, overall home sales fell nearly 6 percent because of a short supply of listings.
Orr said looming economic woes could dampen the market, but he wouldn’t predict the market’s performance more than a few months ahead. Even if interest drops among buyers who plan to live in the home they purchase, Orr said strong investor demand will fill that gap.
New home construction shot up 57 percent in the last year as homebuilders are responding to the shortage.
“They’ll go as fast as they can but that’s not very fast because of the shortage of labor,” Orr said. “It’s not clear how quickly the labor shortage can be filled.”
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