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Housing prices continue to tumble in metropolitan Phoenix

September 19, 2008

The steep decline in Phoenix-area home prices continues, with average sale prices dropping in June for the 16th consecutive month.

The Arizona State University-Repeat Sales Index shows average metro Phoenix home prices declined by 22.8 percent from June 2007 to June 2008. It was the fourth month in a row that home prices declined by double digits.

The Phoenix area has seen house prices decline for 16 straight months now. That's almost as long as the record 17-month index drop experienced during the last serious real estate recession in Arizona in the early 1990s.

However, there is some good news, says Karl Guntermann, the Fred E. Taylor Professor of Real Estate at the W. P. Carey School of Business at ASU. Even though the year-over-year percentage drop was steep in June, the rate of decline has slowed for the second straight month. That means the rate of decline in prices is close to leveling out, but it doesn’t mean that home prices are bottoming out.

“The slowing in the rate of decline, if it holds in future months, is a good sign,” says Guntermann, who compiles the ASU-RSI with research assistant Alex Horenstein. “The housing market will have bottomed out in terms of price when the rate of decline from one year ago is zero.”

The biggest year-over-year drop in June – 28.1 percent -- was recorded in Peoria. The smallest decline was 14 percent, recorded in Scottsdale/Paradise Valley.

The ASU-RSI is based on repeat sales, the most reliable way to estimate price changes in the housing market. Repeat sales compare the prices of a single house against itself at different points in time, instead of comparing different homes with different quality factors.

The ASU-RSI is produced through the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. The current report and archived previous reports are available at the Division of Real Estate - Repeat Sales Reports.