Home prices have fallen, but not enough to solve Arizona’s affordability woes, report says

Article originally posted on HERE on May 13, 2026

Arizona still has a supply and demand imbalance when it comes to housing, according to a new report from the Arizona-based think tank, Common Sense Institute.

The report says just 42% of households in the state would be able to afford a new mortgage — down from 66% in 2019.

Homeownership remains out-of-reach for many Arizonans in spite of the fact that home prices fell nearly 3% in 2025.

“That’s 3% on a level that was so high historically, that while that is some progress, it’s not really changing the broader dynamics of the housing market, which is that housing is very, very expensive,” said Zachary Milne, one of the report’s authors.

The report estimates Arizona is nearly 56,000 units short of immediate demand.

But construction appears to be slowing. The report says the number of housing permits issued in the state last year fell to the lowest point since 2019.

“We’re not quite building enough to close that shortfall in any meaningful period, and as a result we’re still seeing elevated housing prices,” Milne said.