More houses are being built in Arizona — but is it enough?

Arizona has been facing a housing crisis since the Great Recession, and the latest Annual State of Housing in Arizona report from the state’s three public universities shows some encouraging signs, but it also shows we are still a long way from solving the problem.

Alison Cook-Davis is research director at the Morrison Institute for Public Policy at ASU, as well as co-director of the Arizona Research Center for Housing and Economic Solutions. The Show spoke with her more about it, beginning with one of those encouraging signs: Housing construction is at a decade high.

Full conversation

ALISON COOK-DAVIS: 2024 was a good year for construction. So that’s really a good sign. But we still see that household growth is consistently outpacing housing growth, and we’re still kind of playing catch-up from that shortage that has started from the recession on.

LAUREN GILGER: Yeah, it’s been a long time coming. So construction is coming, but not enough. And I’m sure the barriers to that have to do with the economic reality right now. Everything else, including construction, costs more.

ALISON COOK-DAVIS: Absolutely. Yeah, I mean, the construction costs have continued to increase. We’ve also seen higher interest rates, which is also very constraining. And so, yeah, these things kind of mount up. There’s also been a number of challenges around just having the workforce, and the cost of building is reflected in that.

LAUREN GILGER: Yeah. OK. Another silver lining highlighted in your report is to do with rental costs, which might sound surprising to anyone who’s paying rent in the Valley right now. But they are leveling off, right?

ALISON COOK-DAVIS: Yes. The most recent numbers show that year-over-year, they’re still increasing. But it has the lowest increase since 2021. And so what that suggests is that we are seeing this leveling off, maybe a little bit of moderation here. And I think this is good news for renters to some extent, and that is reflected also in the housing cost burden has lowered slightly. But it’s still over 50%.

LAUREN GILGER: Right. And you still find that over half of renters spend 30% or more of their income on housing, which is sort of that recommended amount you’re supposed to spend on housing. And that the state needs just a ton of affordable rental units that we do not have. 90,000?

Stephen Kilar

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Arizona State University

ALISON COOK-DAVIS: Yes. Yes, I mean, that’s really where the crunch is. The bottom of the market where you have the extremely low and very low-income households, that’s where there is just not enough units, and you can’t build homes at those price points. And so it really becomes a need for preservation, for other strategies for being able to provide housing.

LAUREN GILGER: OK, let’s talk about the homebuying market, Alison, because this is another kind of sticking point here. There was one stat in this section that really made me start: the U.S. median age of first-time homebuyers has reached a record high of 40 years old. That’s wildly different than it was just a generation ago. What’s that look like here?

ALISON COOK-DAVIS: Yeah, I don’t have the numbers for Arizona, unfortunately. I only have the national numbers, but it is stark in the sense that I think that the median age for first-time homebuyers was about 31 a decade ago. So it’s changed rather dramatically.

And so the number of first-time homebuyers has actually decreased quite a little bit, and we have seen that the home values have gone up so quickly over time here in Arizona, and even compared to some of our other close-by states. We’re like 66% increase in the last decade.

LAUREN GILGER: Yeah, which anybody looking at the housing market here has seen, right? The prices have just skyrocketed. Has that begun to even out as well? Will they ever go down?

ALISON COOK-DAVIS: That’s a really good question. The short answer is probably not 66%.

LAUREN GILGER: Right. Never that much!

ALISON COOK-DAVIS: And I think it’s worth noting, I think that one of the things in the report was also kind of stark was looking at just residential home sales prices over time over the past decade, and just seeing the change where we saw about 40% of homes that were selling between $100,000 and $200,000, and now in 2025, that’s only like 5% of the sales. So you’re seeing a lot fewer of those entry-level homes. And wages haven’t really kept up with these really fast increases.

LAUREN GILGER: Yeah. You also look in this report at homelessness in the state, and we have seen the rates of homelessness here rise a ton in recent years, and more than in other kind of comparable Sun Belt states, you found. Talk about the connection between the reality of people living on the street, which all of us see every day when we’re driving around or walking around the city, and these kind of big-picture housing challenges.

ALISON COOK-DAVIS: It is the worst manifestation of housing unaffordability. And Arizona also saw a rise in unsheltered homelessness, which was particularly difficult to see. The reality is these constraints, this increase of unaffordability, what that means for different folks, some people may have to rent longer and not be able to get into a home, and some people just may not have a home. This is the continuum of these challenges. And so this really is a housing affordability problem.

LAUREN GILGER: Yeah, that’s really an interesting way to look at it that we don’t always put it into that lens. Let me ask you lastly, Alison, about the big picture here in terms of, we always think about Arizona, the Valley, the county here, as the fastest-growing place in the country, this incredibly booming metropolis, which it still is, you find here, but that pace of growth seems to be slowing. And because of that, the population here is becoming more diverse. That all kind of leads to housing challenges as well.

ALISON COOK-DAVIS: Yeah, we do continue as a state to grow. I mean, Arizona gained about 67,000 residents in 2025. We have seen international migration decline substantially from 2024. But even that net growth has slowed down. But we still are seeing our household formation is outpacing the units that are being brought online. So all of these things add up to where are we going to be? And I can’t predict that, but we are definitely we could be 9 million by 2030, you know?

LAUREN GILGER: Wow. And that will mean that the demand for housing changes and continues to go up, but also that we need different kinds of housing, right? Like we need those entry-level homes that you talked about us not having enough of, but we also need homes for seniors, things like this that we don’t think about necessarily.

ALISON COOK-DAVIS: Yeah, I mean, this has been a big part of the demographic shift, too, where we’ve seen just this shift in having older Arizonans. And so it is top of mind in thinking about what that means in aging in community and being able to have the place and space to be able to age where you live. Sometimes folks are looking to potentially downsize, but those smaller, easily accessible homes are not always easy to find.

And even if you’re in a home that you have owned for a long period of time, moving can be very challenging, but then having a place to move to that fits your needs could be possibly the constraining factor in being able to do that.

LAUREN GILGER: Yeah. Well, we’ll leave it there for now. Alison Cook-Davis, research director with the Morrison Institute for Public Policy at ASU. She’s co-director for the Arizona Research Center for Housing and Economic Solutions, host of this report. Alison, thanks very much for coming on. Thanks for walking us through all of this. I appreciate it.

ALISON COOK-DAVIS: Thank you so much. I appreciate you.