Putting It All Together: Historical Context and What It Means for Northern Arizona Real Estate

Introduction

Numbers alone don’t tell the whole story. To make sense of today’s market, real estate professionals need to understand how current conditions compare with past cycles. Northern Arizona has experienced dramatic swings in sales, prices and sentiment since the pandemic. This article synthesizes the data and offers context for what may lie ahead.

Sales and price history

During the pandemic boom, Flagstaff home sales surged. August 2020 saw 228 homes sold, and July 2020 hit 243 sales—levels far above pre-pandemic norms. By contrast, August 2025 sales were 121, and July 2025 sales were 107, roughly in line with 2018–2019 levels. This normalization shows that the market has cooled from its frenzy but remains relatively healthy. Similarly, median sales prices climbed sharply from 2020 to 2022 and have since plateaued. Flagstaff’s All-Transactions House Price Index reached 481.12 in Q2 2025, barely higher than 478 in late 2024.

Economic cycle and leading indicators

The housing market doesn’t operate independently of the broader economy. The Conference Board’s U.S. Leading Economic Index (LEI) declined 0.5 % in August 2025, following a 0.1 % increase in July. The index fell 2.8 % over the prior six months, and the report noted that only stock prices and the Leading Credit Index supported the LEI while most other components deteriorated. A weakening LEI suggests economic headwinds and raises the possibility of slower GDP growth around 1.6 % in 2025. For real estate, slower growth and softer labor markets could dampen demand.

Mortgage rates through time

Mortgage rates remain a key driver. While the 30-year fixed rate stood around 6.34 % in early October 2025—far above the 3 % rates of 2021—it has eased from the 7 % highs of 2023. Higher rates have reduced purchasing power and cooled demand, but they also deter potential sellers locked into lower rates from listing their homes, contributing to limited inventory.

Housing supply and demand over time

New construction has not kept pace with population growth. Coconino County issued 703 building permits in 2024, down from 1,123 in 2023. Even though single-family permits rose slightly to 331 in 2024, overall housing supply remains tight. Estimates suggest that Arizona faces a deficit of roughly 52,846 units. Limited new supply explains why prices remain elevated despite softer demand.

Future outlook and strategy

The data suggest Northern Arizona is settling into a new normal—a balanced market characterized by moderate sales, slower price appreciation and cautious sentiment. Economic indicators point to slower growth, and leading indicators hint at potential headwinds. Mortgage rates may drift lower but are unlikely to return to pandemic lows. With construction still lagging, housing supply will stay constrained.

Strategies for stakeholders

Buyers: The normalization of sales and increase in inventory create opportunities to negotiate. Act decisively when a suitable property appears and lock in rates when dips occur.

Sellers: Set realistic prices. Homes no longer sell in days, so proper staging and marketing are essential.

Investors: Focus on long-term fundamentals. Population growth and limited supply suggest that well-located properties will hold value over time.

Final Thoughts

Looking back at the highs of 2020–2021 and comparing them with today’s market helps real estate professionals and clients set expectations. Northern Arizona is transitioning from a boom to a balanced market. By understanding the broader economic context, watching leading indicators and recognizing supply constraints, stakeholders can make informed decisions. Whether buying, selling or investing, patience and data-driven strategies are more important than ever.