Construction is up, but Arizona's housing affordability problem isn't solved, report says

Housing construction is picking up in Arizona, but the state still faces a shortage of homes and many Arizona households remain cost-burdened, according to a new report from Arizona’s three public universities.

The annual State of Housing in Arizona report from the Arizona Research Center for Housing and Economic Solutions shows a few encouraging signs. The report says rent prices in the state appear to be leveling off after years of skyrocketing increases and home construction is at its highest point in a decade.

“What we talked about for several years was the need to increase supply, and we are seeing more homes being built, so that’s great,” said Alison Cook-Davis, one of the report’s authors. “But the increase in production doesn’t immediately erase the shortage that has developed over many years. And Arizona continues to grow.”

Cook-Davis said solving the state’s housing shortage won’t just be a matter of building more.

“It’s also about creating enough housing choices that people at different incomes and stages of life can find a place that they can afford,” Cook-Davis said.

The housing shortage is most acute for Arizona’s lowest-income renters. The report counts more than 170,000 Arizona households as “extremely low-income,” but says the state has fewer than 80,000 rental units that these families would be able to afford.

Cook-Davis said it will take policy changes to create enough affordable housing to fill that gap.

“You can’t build at that income level and have it pencil out, so it has to be done through subsidy, it has to be done through other ways of preservation,” Cook-Davis said. “The low end of the market is the hardest to maintain.”

The report notes housing costs in the state have outpaced wage growth. Housing costs increased 38% for Arizona renters from 2014 to 2024, the report says. But wages grew only about 29% during the same period.

“Since 2021, median wages have increased $405 per month while median housing costs have increased $195 per month, meaning nearly half of wage growth has been absorbed by the rise in housing costs,” the report says.

Meanwhile, Arizona households are also facing higher utility bills and other inflationary pressures, the report notes.

“Arizona is making progress,” Cook-Davis said. “But we have not yet solved the affordability problem.”