Tucson Housing Market Defies National Trends

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  Published in House and Home on Tuesday, February 17th 2026 at 4:09 GMT by Arizona Daily Star
      Locales: Arizona, UNITED STATES

Tucson Housing Market: Resilience Amidst Rate Hikes Signals a New Normal

TUCSON - The Tucson metropolitan area's housing market continues to defy national trends, demonstrating remarkable resilience in the face of sustained high interest rates. While many regions across the United States have experienced price corrections or significant slowdowns, Tucson remains comparatively stable, albeit in a state of transition. Experts predict a 'new normal' characterized by moderate price adjustments and continued competition for limited inventory.

Recent data from Zonda, a leading housing data and analytics firm, indicates a median sales price of $447,819 for new homes and $388,000 for existing homes in Tucson. These figures, while representing substantial home values, haven't plummeted as anticipated given the aggressive interest rate hikes implemented by the Federal Reserve over the past two years. Kathleen Rudio, Executive Vice President of Sales at Zonda, expressed surprise at the market's strength. "We expected to see prices drop more significantly," she stated, "but the inventory is still so low that it's propping up the prices."

The key to understanding Tucson's resilience lies in its persistently low housing inventory. As of November, the Arizona Association of Realtors reported only 2,600 homes available for sale in the Tucson area - a figure well below pre-pandemic levels. This scarcity of supply continues to fuel competition and maintain upward pressure on prices, effectively offsetting the dampening effect of higher borrowing costs. Mike Ponder, President of the Southern Arizona Home Builders Association, corroborates this assessment. "People are still buying homes and the prices aren't dropping," he noted, highlighting the continued demand despite affordability challenges.

However, the market isn't entirely impervious to external pressures. While a dramatic 'crash' isn't foreseen, signs of cooling are emerging. Homes are taking longer to sell - "days on market" are increasing - and price reductions are becoming more prevalent as sellers adjust to the changing landscape. Rudio anticipates a "gradual cooling" rather than a sharp decline, emphasizing that high interest rates are undeniably impacting affordability.

Indeed, affordability is the most significant hurdle for potential homebuyers in Tucson. Increased mortgage rates have substantially inflated monthly payments, stretching budgets and pricing out a growing number of prospective buyers, particularly first-time homebuyers. Ponder points out, "People are still buying homes, but they're having to stretch their budgets," underscoring the financial strain on those entering the market.

The situation is further complicated by demographic trends and Tucson's growing appeal as a desirable place to live. In-migration, driven by retirees, remote workers, and individuals seeking a more affordable and temperate climate compared to other Southwestern cities, continues to bolster demand. While this influx benefits the local economy, it also exacerbates the housing shortage.

Looking ahead, experts predict that the Tucson-area housing market will remain competitive for the foreseeable future. While the rapid price appreciation of recent years is unlikely to continue, a substantial price drop is also not expected. The market is entering a period of "transition," as Rudio describes it, "adjusting to the new normal of higher interest rates." This new normal likely entails slower price growth, increased negotiating power for buyers, and a greater emphasis on realistic expectations.

For sellers, adapting to this shift will be crucial. Overpricing homes and expecting bidding wars are becoming less viable strategies. Instead, realistic pricing, strategic staging, and a willingness to negotiate are essential to attract buyers in the current environment. Buyers, on the other hand, should be prepared for a competitive market and the need to act decisively when a suitable property becomes available. Securing pre-approval for a mortgage and being flexible with their requirements will also enhance their chances of success.

Ultimately, Tucson's housing market is proving to be a unique case study in the current economic climate. Its combination of low inventory, sustained demand, and demographic factors has created a remarkably resilient market that is weathering the storm of rising interest rates better than many of its counterparts. The coming months will reveal whether this resilience can be maintained as the market continues to adapt to the new realities of higher borrowing costs and evolving buyer preferences.