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Cromford Demand Index™ is a value that provides a short-term forecast for the demand for resale homes in the market. It is derived from the trends in pending and sold listings compared with historical data over the previous four years. Values above 100 indicate more demand than usual, while values below 100 indicate less demand than usual. A value of 100 indicates the demand is close to normal.
May 26 - Here is our latest table of Cromford® Market Index values for the single-family markets in the 17 largest cities.

The decline in CMI values is still accelerating with an average monthly change of -28% compared with -24% last week. The pace at which the market is cooling off is both astonishing and widespread. The least affected are the active adult areas such as Sun City, Sun City West, and Sun Lakes, none of which are big enough to appear in the above table.

The largest declines over the past month have been seen in Avondale, Gilbert, Queen Creek, Cave Creek, and Chandler. The smallest declines can be found in Paradise Valley and Fountain Hills but even here the fall is a massive -21%.

Only 7 cities are still over 300. There were 15 a month ago.

Buckeye is interesting in that demand has actually improved over the past month. However, supply continues to build quickly and overwhelms that effect.

In absolute terms 166 to 400 are all seller's market CMI numbers, so we are not yet close to the point where buyer's have an advantage. However, buyers' disadvantage in negotiations has dropped dramatically. This is because there is much less competition from other buyers. Many of these have dropped out due to the eye-popping increase in mortgage rates. There are also many more homes to choose from compared with a couple of months ago.

Cash buyers remain active, but these are a much smaller part of the total demand and cannot compensate for the loss of financed buyers.

May 23 - Every leading indicator is pointing to a sharp slowdown in the Greater Phoenix housing market. Supply has increased very quickly over the last 2 months while demand is much weaker than it was in March.

Prices are much slower to react to a change in the market, especially closed sale prices. However, prices for homes under contract react 1 to 2 months earlier than closed prices. Even sooner than that, we would expect to see weakness in asking prices. This is now starting to appear as sellers gradually lose confidence. Some sellers will be in denial for many months yet and will risk over-pricing their home in current market conditions. Others will be more reactive and make sure their asking pricing is competitive.

Here is a chart showing daily average price per square foot for 4 measures:

1. List prices for active listings as of May 23
2. List prices for listings under contract as of May 23
3. List prices for closed listings during the last month (Apr 23 - May 22)
4. Sale prices for closed listings during the last month (Apr 23 - May 22)

We can see that the average $/SF for active listings (the blue line) has not managed to break through $365 and is now showing signs of retreating below $360. The maximum was $364.81 achieved on April 27. This is probably going to be the top.

The green line is for listings under contract and has not yet shown any weakness. However, it is not showing much willingness to move above the current level of $313 to $314. This is probably close to the top, though we are by no means certain of this.

The closed prices are still blissfully unaware of the change in market conditions. The sale price per sq. ft. remains higher (at around $305) than the list price (around $300). However if the green line starts to drift lower we would expect the red and brown lines to do the same. Eventually the red line will drop below the brown line in a signal that market has returned to normal.

The remarkable speed of the change in the market is reflected in the fact that the Cromford® Market Index has dropped over 100 points in the last month.

Real Estate Observations

• Active listings have risen dramatically in the Phoenix Metro, to 28% month over month. However, this is not a result of a new flood of listings hitting the market. It's because demand has decreased causing existing homes to stay on the market longer.
• We saw a total of 1,496 listing price reductions this past week of May 15th in the Pheonix Metro. This is the largest amount since the week of March 29th of 2020 when there were 1,521 price reductions.
• Listings Under Contract are down 8.6% month over month
• New home sales across the nation decreased 16% in April as a result of rising prices and interest rates. Median new home prices rose 19% year over year to $450,600 in April.

Keep the Big Picture In Mind: It's Not All Doom and Gloom

Sales Prices are a Lagging Indicator: Expect these Values to Decrease in the Coming Months.