Phoenix has been the newest fire market in the West. Investors have been flocking there, following surges in population and job growth and a diversifying economy—and it has been expected to have a long runway, thanks to a late-cycle recovery. However, single-family home sales declined in the fourth quarter 2018, causing some concern about the market. According to research from Land Advisors Organization, home sales in 4Q18 were down 3.6% compared to 2017.

“In Phoenix, the primary catalyst when it came to decreased home sales in Q4 of 2018 was two-pronged: The first was unattractive interest rates, and the second was speculative national press attention, which always impacts home buyers' psychology. However, to contrast we have seen a strong Q1 to date,” Greg Vogel, founder of Land Advisors Organization, tells GlobeSt.com.

Despite the slowdown in home sales, prices continued to increase during the quarter. The median home price in Phoenix increases by 14.8%, rising 3.1% in December alone to $320,000. “One of the primary reasons comes down to overhead,” adds Vogel. “Costs are rising, which forces builders to raise their own prices in order to keep up with inflation. Interesting to note, but the cost isn't necessarily down to materials. One of the largest is actually labor (See story). This is a really healthy job market for employment seekers, and there are no shortage of jobs to keep them employed. Competition in regards to benefits and pay is very stiff, and this cost often translates across to the consumer.”