January traditionally sets the tone for the year ahead, and January 2026 is no exception. As a French real estate agent in Arizona, I’ve observed that the Greater Phoenix market is currently moving through a normalization phase. The landscape is far more nuanced than simple headlines suggest.
Understanding the shifts in mortgage rates, pricing, and inventory is key to making smart investment decisions this year. Here is a clear breakdown of where we stand as we move deeper into Q1.
Mortgage Rates: Small Changes, Big Impact
One of the most important takeaways this month is how sensitive affordability remains to interest rates. Data shows that every 1% drop in mortgage rates translates into roughly a 10% reduction in principal and interest payments.
With tools like 2/1 buydowns, some buyers are effectively seeing first-year payments helpful.
This is why buyer activity has started to pick up; even small rate improvements matter more than many people realize.
Buyer Activity: Stabilizing, Not Surging
Mortgage application data confirms that demand has stabilized. While purchase activity is not exploding, it is holding steady. This indicates that buyers are finally adapting to the today's environment instead of waiting on the sidelines.
Today’s market is no longer driven by fear of missing out. It is driven by math, lifestyle needs, and negotiation power.
Pricing Trends: The Great Divide
When we break pricing down by range:
Homes under $1 million are seeing modest price corrections, with most segments down between 1% and 5% year over year on a price-per-square-foot basis. This reflects affordability pressure, especially for first-time and payment-sensitive buyers.
Above $1.5 million, the story changes completely. Properties between $2 million and $3 million are up , and homes over $3 million are up more than 7% year over year. The luxury market in areas like Paradise Valley, Scottsdale, and select parts of Phoenix remains resilient. Cash buyers, equity-rich buyers, and lifestyle-driven relocations continue to support this segment.
Inventory and Sales Volume
Despite mixed pricing trends, total sales activity is up 5.6% year over year.
Active listings are up, with just over 22,500 active listings across Greater Phoenix. While inventory is higher than last year, it remains well below the extremes we saw during past downturns. More options for buyers does not automatically mean falling prices; it means leverage, negotiation, and time to make informed decisions.
Where is the Opportunity? (Buyer’s vs. Seller’s Markets)
The Greater Phoenix real estate market can be fragmented. Depending on where you look, you will find different conditions:
Seller’s Markets: Fountain Hills, Chandler, Gilbert, Phoenix and Scottsdale.
Balanced Markets: Mesa, Glendale, Tempe, Cave Creek, Peoria and Paradise Valley.
Buyer’s Markets: Goodyear, San Tan Valley, Surprise, Queen Creek, Buckeye and Maricopa.
What This Means for You
For Buyers: January 2026 represents opportunity. Selection is better, negotiations are realistic, and rate strategies can meaningfully reduce monthly payments. Waiting for perfect conditions often costs more than acting with the right plan.
For Sellers: Pricing and preparation matter more than ever. In a market where the median days on market is 52 days, testing the price is not a winning strategy. Accuracy and professional marketing are essential.
Final Thoughts: The French Touch Advantage
The January 2026 market is neither booming nor collapsing; it is healthy and normalizing. Whether you are looking for a primary residence or a luxury investment, success comes down to understanding local data and how financing intersects with pricing.
If you are looking for a French real estate agent in Phoenix who provides a data-driven strategy with an international perspective, I am here to help.
Arnaud Lavigne
French Touch – Arizona Lifestyle
