Reading the Mood: Builder and Buyer Sentiment in Northern Arizona’s Housing Market

Introduction

Beyond hard numbers, real estate professionals need to understand how people feel. Sentiment indicators measure confidence among builders and consumers and often foreshadow market shifts. In Northern Arizona, where supply constraints meet affordability challenges, gauging mood is crucial for anticipating demand.

Builder confidence: NAHB Housing Market Index

The National Association of Home Builders (NAHB) Housing Market Index (HMI) remained at 32 in September 2025, reflecting continued pessimism among builders. Sub-indices showed current sales conditions at 34, sales expectations for the next six months at 45 (up slightly), and traffic of prospective buyers at 21. Importantly, 39 % of builders reported cutting prices, the highest share since the post-COVID market slowdown, with an average price reduction of 5 %. About 65 % offered sales incentives, indicating that builders are working harder to attract buyers. These measures suggest that new-home builders see weak demand and are adjusting accordingly.

Consumer sentiment: Fannie Mae Home Purchase Sentiment Index

Fannie Mae’s Home Purchase Sentiment Index (HPSI) stood at 71.4 in August 2025, essentially unchanged from July. The September National Housing Survey revealed that 73 % of respondents thought it was a bad time to buy a home, while 27 % felt it was a good time. 57 % believed it was a good time to sell, and 32 % expected mortgage rates to fall. More than half said obtaining a mortgage was difficult. This sentiment underscores the affordability challenges facing buyers; while some expect rates to decline, most feel the current environment is unfavorable for purchases.

National consumer sentiment

The University of Michigan Consumer Sentiment Index dropped to 58.2 in August 2025, down from 61.7 in July. Although not housing-specific, the decline signals consumers are growing more cautious about the overall economy. When people feel uncertain, they often postpone major purchases such as homes or delay moving to a new area, which can reduce buyer activity in Northern Arizona.

Local market sentiment

Local market reports show a more nuanced picture. Flagstaff’s August 2025 update described a market with abundant inventory but slower demand; median list prices remained around $835,000, and homes were staying on the market 65–79 days. Sales volumes were down compared with 2024, and the report called it a “buyer’s moment” because patient shoppers could negotiate concessions. The July 2025 report noted that the $600k–$800k price range dominated listings and sales and that the pending ratio was just 0.2 %, signaling that buyers held the upper hand. Buyer tips from local realtors encouraged leveraging increased inventory to secure favorable terms.

Conclusion

Sentiment indicators depict a market that is cautious but opportunistic. Builders are pessimistic and offering incentives, while consumers express mixed feelings about buying and selling. National consumer sentiment is weakening, which could further dampen demand. However, local reports show that buyers who remain in the market can negotiate better deals thanks to higher inventory and longer marketing times. Real estate professionals should monitor these sentiment gauges alongside objective metrics to anticipate shifts and advise clients on timing and strategy.