Key Points:

• Arizona housing permits issued at lowest pace since 2019

• Single-family permits dropped nearly 12% over the past year

• The Federal Reserve’s interest rate cut may offer relief to potential homebuyers

Housing permits issued in Arizona are at the lowest annual pace since 2019, but prices are continuing to sit at just under half a million dollars.

The number of both single-family and multi-family building permits approved has dropped over the past year, according to the Joint Legislative Budget Committee’s October fiscal highlights report. 

The report’s latest numbers track a 12-month rolling total through August. From August 2024 to August 2025, there were 36,455 single-family building permits issued in the state, which is nearly a 12% decrease from the previous August’s 12-month total. 

Multi-family building permits have had an even greater drop off in the same time period, at over 30%, with 14,582 multi-family permits issued. 

And while building appears to be slowing, home prices have remained about the same for nearly three years. 

The median sale price of a home in Arizona in September was $447,000, according to the real estate brokerage Redfin. That price is slightly higher than September 2024’s median sale price of $441,000 and a 7% increase from September 2022’s median sale price of $431,000.

“Prices are too high. Development is slowing and we do have a policy tool for fixing that and that policy tool is the zoning and permitting requirements,” said Glenn Farley, director of policy and research at the Common Sense Institute. 

The U.S. Census Bureau does not have updated permit data through September due to the federal government shutdown. The bureau’s August 2024 report listed 7,771 more total units to date than its August 2025 report, also showing a decline in housing permits issued.

The Common Sense Institute also concluded the number of housing permits issued in the state is on the decline, tracking a 12% decrease of permits issued in 2025 from the previous year in its Sept. 18 housing report. 

At an estimated pace of just under 52,000 total housing unit permits for the year, Common Sense Institute’s report notes that would be the slowest pace of annual housing permits approved in the state since 2019. 

Farley said the state’s current pace is still higher than it was following the Great Recession up to the COVID pandemic, which resulted in an accelerated pace of housing permits issued.

“We’re not there anymore. We were there for a while after the pandemic, but not for very long,” Farley said. “We certainly need to build more units.”

Potential homebuyers could see some relief in mortgage rates after the Federal Reserve cuts its interest rate for the second time in two months.

The Associated Press reported Oct. 29 that the Federal Reserve lowered its key interest rate by a quarter-point to about 3.9%, which could reduce borrowing costs for mortgages and other loans over time. 

At the state policy level, Farley recommended that cities and towns take action to make it cheaper to get permits approved and to lower the cost of building housing units, such as requiring fewer specific design elements for approval. 

Senate Bill 1229, the “Arizona Starter Homes Act,” proposed to eliminate several design regulations in the permitting process, but the bill never made it to the governor’s desk in 2025 and was opposed by the state’s cities and towns, which argued that there’s no guarantee in the legislation that homes would be sold to Arizona residents instead of corporate investors.

The League of Arizona Cities and Towns attributes permitting delays to non-municipal reasons, including subdivision process issues and the approval process from federal, state and county agencies.

The Legislature in 2025 also chose not to renew the state’s Low-Income Housing Tax Credit program, which was implemented to help develop affordable rental housing units. 

Arizona Housing Coalition Executive Director Nicole Newhouse said she expects the discontinuation of the program to hurt rural communities, since housing developers will have lost the incentive to build more units in areas with lower median incomes than in metropolitan areas.

“We’ve been working for the last three years to renew this program to no avail,” Newhouse said. “Last session was perhaps the hardest. We will be the first state in these United States that created a state LIHTC program and then allowed it to sunset.”

Farley said the Common Sense Institute is waiting until the new year to examine more data on how the state’s pause on new home construction in some areas of the Valley has affected housing supply in places like Queen Creek and Buckeye.

The Goldwater Institute is representing the state’s Home Builders Association of Central Arizona, which is currently suing the Arizona Department of Water Resources over rules that have paused new home construction in areas where a developer can’t show there’s a groundwater supply of at least 100 years.

“We know that the supply end of things is critical in making housing affordable,” said Rep. Stephanie Stahl Hamilton, D-Tucson. “It’s not solely building affordable units, but if there’s enough supply on the market, prices will come down and it will free up.”