Arizona Is Holding Steady in Affordability and Homebuilding: Can Gov. Hobbs Keep the Balance?

Arizona’s housing market remains one of the West’s most dynamic—but also one of its most delicate.

The state earned a C on the Realtor.com® State-by-State Housing Report Card , part of the Let America Build campaign evaluating how well states balance affordability and construction.

Because the issue is clearly a national one. In fact, President Donald Trump recently put pressure on large homebuilders to increase construction nationwide. In a post on his Truth Social platform in early October, he accused major builders of hoarding lots to prop up prices — likening them to OPEC, which restricts oil output to maintain high prices. 

“They’re my friends … but now, they can get Financing, and they have to start building Homes. They’re sitting on 2 Million empty lots, A RECORD,” Trump wrote. He urged Fannie Mae and Freddie Mac to intervene and “get Big Homebuilders going” in order to “restore the American Dream.” 

While Arizona continues to build at a healthy pace, rising demand and tight water restrictions have kept affordability under pressure, leaving the state squarely in the middle of the national rankings.

A balanced but challenging market

Arizona scored 56.5 overall, placing it in the mid-tier nationally. The state’s median listing price of $499,982 in 2024 reflects its ongoing growth as a destination for new residents, while a median household income of $74,483 provides only limited breathing room for buyers. The Realtor Affordability Score came in at 0.50, showing that most Arizona households remain cost-burdened when trying to buy a home.

On the construction side, Arizona is pulling more than its weight. The state accounted for 4.0% of all new home permits nationwide in 2024, despite making up just 2.3% of the U.S. population. That translates to a strong permit-to-population ratio of about 1.7, one of the best in the country.

In fact, Arizona is among seven states(Texas, Florida, California, North Carolina, Georgia, Arizona, and South Carolina) that accounted for over half of the permits for construction issued in 2024.

Its new construction premium—the difference between new and existing home prices—was a slight -2.7%, meaning new homes are now priced slightly lower than resales on average. That makes Arizona one of the few states where new construction has actually improved affordability.

How Arizona fits into the regional story

It would behoove the rest of the nation to follow Arizona's lead.

“America is short more than 4.7 million homes, and every new home built helps close that gap while fueling local economies," says Shannon McGahn, executive vice president and chief advocacy officer at the National Association of Realtors®.

"NAR research shows that the U.S. has faced a persistent housing shortage for more than a decade, driving up prices and limiting options for buyers. Expanding housing supply creates jobs, supports small businesses, and affords families the opportunity to build generational wealth.”

According to the recent Realtor.com New Construction Insights, the South and West continue to dominate homebuilding across the U.S., accounting for the majority of new listings. Nationally, the median price for new homes was $450,797, up just 0.7% year over year, while resale prices climbed 2.4%. That pushed the national new construction premium down to a record-low 7.8%, signaling that new builds are becoming more competitive with older homes.

In Arizona, the steady pace of new construction has helped moderate prices in fast-growing metros like Phoenix and Tucson.

Governor Hobbs targets attainable housing

Thankfully, Governor Katie Hobbs has made housing supply a key priority of her administration. In 2024, she secured $150 million in funding for the State housing Trust Fun through a bipartisan budget. Those funds go towards a statewide effort to increase attainable housing and streamline the permitting process for new development.

In June, Governor Hobbs was on hand to dedicate the first ten of forty newly constructed, permanently affordable, single-family starter homes for first-time homebuyers in Flagstaff's Timber Sky Community. The Arizona Department of Housing (ADOH) used $2.16 million in State Housing Trust Fund dollars toward these ten 500-square-foot, all-electric, starter homes that feature solar panels and thermal insulation to lower energy costs, 23-foot ceilings with large windows, lofted bedrooms, living areas, kitchens, and full bathrooms.

“Access to affordable housing unlocks opportunity, security, and freedom for Arizonans. I’m proud to see the first single-family project of my administration come to life,” said Governor Hobbs. “This development was funded and built in quick order to ease the burden many Arizonans face with housing costs. Home prices in Flagstaff, like in many Arizona communities, have skyrocketed in recent years, and these Timber Sky starter homes will help working class Arizonans achieve the dream of homeownership.”

Building a sustainable path forward

The National Association of Home Builders’ Blueprint to Address the Housing Affordability Crisis echoes the priorities Governor Hobbs is pursuing—reducing regulations, improving access to skilled labor, and fixing supply chain challenges. NAHB’s plan emphasizes that building more attainable homes is the only effective way to curb shelter inflation and restore balance to the housing market.

For Arizona, the outlook is cautiously optimistic. With one of the highest permitting rates in the country and a growing focus on affordability, the state is positioned to remain a regional leader in homebuilding. The next challenge will be ensuring that rapid growth translates into long-term affordability—and that Arizona’s strong housing pipeline continues to deliver homes people can actually afford.

This article was produced with editorial input from Dina Sartore-Bodo and Gabriella Iannetta.