Economy: Phoenix Economy Continues To Expand
In Q3 2026, the Phoenix Metro reported an employment level of 2.5 million, after adding 24,000 jobs over the last year. While the unemployment rate ticked up from3.9% to 4.4% during that timeframe—and exceeded the national average of 4.2%—the increase was largely attributed to expanded labor force participation, rather than job losses. A key driver of this trend has been the Metro’s strong wage growth, with the median household income rising by 4.6% year-over-year (YOY) to $98,500. Phoenix’s population also grew at four times the rate of the national average, however, the 0.8% YOY increase marked a slowdown from previous quarters. Annual GDP growth, meanwhile, accelerated up from 2.4% in Q3 2025 to 2.7% in Q3 2026, underscoring the Metro’s positive economic momentum.
Supply & Demand: Vacancy Plummets Amid Record Demand
Net absorption across the Phoenix Metro reached 18,071 units year-to-date (YTD) through Q3 2026, already eclipsing the record annual total of 17,303 units set in 2024. This robust level of absorption, paired with a meaningful slowdown in new deliveries, enabled vacancy to decrease by 200 basis points (bps) YOY to a three-year low of 10.8%. All 15 multifamily submarkets recorded positive absorption for a third consecutive quarter, with Downtown (760 units), Deer Valley (752 units) and South West Valley (665 units) leading the overall market in Q3.
Developers completed a six-year low of 2,008 units in Q3 2026. The slowdown in deliveries is likely to continue, with the active pipeline declining to 16,013 units, the lowest level since year-end 2019. During Q3, nine out of 15 submarkets observed no new openings, while just one—East Valley—accounted for 42% (835 units) of the Metro’s total. The East Valley is also the most active submarket for ongoing construction, with 3,838 units, or 24% of the market-wide pipeline.
Pricing: Landlords Adjust Asking Rents To Aid Occupancy
Rent trends from Q3 2026 suggested that landlords are generally continuing to temper marketed rates to unlock greater levels of renter demand, with the average level decreasing by 0.9% YOY to $1,590 per unit. This dynamic has been widespread, with 10 out of 15 multifamily submarkets posting YOY declines, ranging from 0.5% in the East Valley to 4.3% in Pinal County. Submarkets that observed YOY increases through Q3 include North Scottsdale (1.9%), Chandler (0.9%), Camelback (0.8%), Gilbert (0.4%) and Old Town Scottsdale (0.2%).
