Phoenix homebuilding soars amid rising interest rates

In the metro Phoenix area, homebuilding has been on the rise. According to housing research firm RL Brown Reports, permits to build new houses are up almost 57% through May, compared to last year’s numbers.

The new house prices in the Phoenix area have remained steady, up less than 1% from May 2023.

Catherine Reagor, Senior Real Estate Reporter at “The Arizona Republic,” joined “Arizona Horizon” to discuss these changes in the housing market.

“Homebuilders are able to do interest rate buydowns. Some sellers do; they’re buying down to 4.6% compared to a seven for a 30 year mortgage,” said Reagor. 

Last year wasn’t the best year when interest rates hit, however this year, the interest rates have improved, and as a result builders are having trouble balancing demand. 

“Last year was pretty lousy when interest rates hit and they were figuring out the buydown, but we also have this incredible demand and the housing shortage, and builders are having a hard time keeping up with demand,” said Reagor.  

The growing population is also a huge factor when it comes to homebuilding and interest rates. People from all over the country are moving to Arizona. 

“We need the homes, we have people moving here, we have employees with jobs who can afford homes, and it’s a lot tougher than it used to be,” said Reagor.

Single family homes are primarily the homes that are being built in all different areas of Arizona. 

“Single family homes, but also a lot of build-to-rent homes. Last year and the year before, we were number one for build-to-rent homes, and we’re still in like the top three or four,” said Reagor.