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After a remarkable rebound, the Phoenix housing market is cooling down. The latest figures show Phoenix is off to a less than promising 2014. The number of homes for sale in January stood 29 percent above their levels of a year earlier, according to the Arizona Regional Multiple Listing Service Inc. A new report from Arizona State University’s W. P. Carey School of Business has found a 4 percent drop in home prices in January.

“January is usually the quietest month of the year for sales, but this January was far weaker than January 2012 and 2013,” said Michael Orr, a real estate director at the W.P. Carey School of Business at Arizona State University. “Despite the huge price increases between January 2013 and 2014, the total dollars spent on homes here this January actually dropped by 7 percent. This is the second lowest level of demand we’ve seen in 14 years, behind only 2008.”

Data from Zillow Inc. show that home values in January stood 9 percent above their levels of a year earlier, down from year-over-year gains of 18 percent reported during much of last year.

Luxury homes are one of the only bright spots in the market, with homes above a half-million dollars representing 14 percent more of the sales transactions this January than last January. However, even the supply of luxury homes is quickly rising, so sellers in that space will face tougher competition in 2014.

Back to a buyer’s market.

“Demand is really getting quite low. Each month it seems to get a little worse than I expect,” Orr said.

Already, there are signs that the strong price rebound of the past two years has cooled. After 25 straight month-over-month gains, prices have now stayed flat or fallen in each of the last four months.

“The market conditions suggest prices will struggle to make any further upward progress in 2014,” Orr added. “With February through June the strongest part of the year, we may yet see a little forward movement, but it’s likely to be tentative at best. The real test will come in the second half of the year, which is likely to see lower prices unless demand takes a distinct turn for the better.”

Ahwatukee year to date has been in a buyer’s market, but with sales and pending sales up and inventory down it seems to be shifting to a more balanced market. The average sales price per square foot is $148.12, the low average per square foot is at $94.99 and the high price per square foot is at $301.51.

• Bonny Holland is with Keller Williams, Sonoran Living in Ahwatukee Foothills. Reach her at (602) 369-1085, or on Facebook and Twitter.

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