Northern Arizona Real Estate and the Economy: Decoding Key Economic Indicators

Introduction

Real estate doesn’t operate in a vacuum. Prices and demand in Flagstaff, Sedona and the broader Northern Arizona region depend on the health of the local and state economy. By examining indicators such as GDP, employment, wages, income, inflation and homeownership, real estate professionals can better understand the market’s trajectory and guide clients effectively.

Economic growth and GDP

Arizona’s economy continued to expand in 2025. The state’s real gross domestic product (GDP)—adjusted for inflation—reached $453.75 billion in Q2 2025, up from $449.76 billion in Q1 and $444.55 billion in Q2 2024. This growth reflects resilience in sectors such as tourism, manufacturing and technology. For Northern Arizona, where tourism to the Grand Canyon and outdoor recreation are major drivers, statewide growth supports employment and consumer spending.

Employment and wages

Coconino County’s labor market provides insight into local demand. The county had 4,086 covered establishments and 65,999 employees in the first quarter of 2025. The average weekly wage was $1,028, lower than Maricopa County’s $1,510 but comparable to surrounding rural counties. Unemployment remains moderate at 5.0 % in August 2025, down from 5.1 % in July. These figures suggest a relatively stable job market that can support housing demand, especially among full-time employees.

Wage growth versus living costs

Statewide per-capita personal income rose to $64,456 in 2024—an increase from $62,194 in 2023. However, housing costs have grown faster. Estimates indicate that Arizonans must work over 64 hours each month to cover a typical mortgage. Average mortgage payments still require incomes near $95,808. This gap underscores the importance of wage growth and alternative housing solutions such as accessory dwelling units or shared equity models.

Inflation and cost of living

Inflation affects real purchasing power. The Consumer Price Index for the Phoenix-Mesa-Scottsdale area—often used as a proxy for Northern Arizona—rose 1.4 % over the year through August 2025. Core inflation (excluding food and energy) increased 1.7 %. Food prices climbed 1.0 %, while energy prices fell 0.8 %. These modest increases suggest that inflationary pressures are easing, which helps stabilize consumer budgets and may free up more income for housing.

Income, homeownership and population

Arizona’s homeownership rate stood at 69.1 % in 2024, slightly lower than the 69.7 % in 2023. Rising prices and higher mortgage rates explain the dip. Despite affordability challenges, homeownership remains high compared with many states. Population growth is also steady; Coconino County’s population rose to about 145,161 residents in 2024, reflecting incremental growth. A growing population supports housing demand but also pressures supply.

Final Thoughts

Overall, Northern Arizona’s economic fundamentals remain healthy, with steady GDP growth, moderate unemployment and rising incomes. Inflation has cooled, but housing costs still outpace wage gains, putting pressure on affordability. Real estate professionals should monitor these indicators because shifts in employment, wages or inflation can quickly alter housing demand. Clients benefit when agents can contextualize local real estate trends within the broader economic landscape.