Arizona Broker Says Uncertainty, Not Interest Rates, Is Stalling the Housing Market

Written by:

Alejandra Rodriguez

Date:

25 Mar 2026

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The common belief that rising interest rates are keeping homeowners from moving may overlook a key reality, according to David Newcombe, Co-Founder and Associate Broker at Compass Arizona. Newcombe says many homeowners who locked in low mortgage rates have since taken on additional debt through home equity lines and other borrowing, raising their effective debt load closer to current rates.

“People always say, ‘They bought at 2.5% or 2.7% and won’t move because the rate jump is too big,'” Newcombe says. “But most have redone their homes, taken out home equity lines, or added other debt. If you consolidate it, the real rate is probably around 5% – maybe higher – if they bought today.”

This challenges the standard explanation for the market slowdown and suggests that uncertainty, not interest rates, is the main reason Arizona’s middle-market housing segment is stalled.

Debt Load Undermines Rate Lock Theory

Newcombe’s view comes from two decades of working with Arizona buyers and sellers. Homeowners who secured low mortgage rates during the pandemic have not stopped borrowing. Many have tapped home equity for renovations or other expenses, or refinanced to access cash.

The monthly debt burden for many homeowners is far higher than their original mortgage rate suggests. When all obligations are considered, effective rates often approach or exceed those for new mortgages today. This undercuts the idea that most homeowners are locked in by low rates and unable to move.

Newcombe also notes that Americans are comfortable carrying multiple debts at once. It is common for U.S. homeowners to stack home equity loans or lines of credit on top of their primary mortgage, creating a layered debt picture that does not fit the simple rate-lock narrative. Given this reality, Newcombe argues, the difference in rate is not what is keeping homeowners from moving. “It’s not that much of a change for them anymore,” he says. “I don’t think that slows things down.”

Uncertainty Stalls the Market

If interest rates are not the main culprit, Newcombe points to uncertainty, both economic and political, as the real reason buyers and sellers are holding back. Newcombe describes a market where participants hesitate not because of differences in monthly payments but because they lack confidence in what comes next.

“What slows things down is uncertainty,” Newcombe says. “People are uncertain. It’s been a tough few weeks, and they don’t know where things are going. Certainty is what moves people.”

Today’s market pause is more about psychology than finances. Many buyers could afford to transact at current rates but are choosing not to because they are unsure about economic stability and the political outlook. The monthly payment difference is less of a barrier than the uncertainty of making a major decision in an unpredictable environment.

Newcombe’s assessment aligns with activity in Arizona’s luxury market. The hyper-luxury segment continues to see competitive deals, according to Newcombe, while the middle tier is largely stalled. If interest rates were the main hurdle, both segments would be affected equally. If uncertainty is the driver, it follows that affluent buyers remain active while those with less financial cushion wait for clarity.

Politics Fuels Buyer Hesitation

Newcombe also sees political messaging as a major source of uncertainty, particularly in Arizona, a key swing state. Newcombe says the constant campaign cycle and partisan framing of economic news have eliminated the stability that used to follow elections and allow markets to reset.

“Politics has played a big part,” Newcombe says. “They’re now continually campaigning, making things sound terrible, and even worse as elections approach. That breeds uncertainty.”

In Newcombe’s view, this creates a feedback loop. Politicians highlight instability to rally their base, making consumers more anxious and suppressing market activity. The cycle repeats every election, fueling negative expectations that weigh on buyer confidence.

Newcombe notes that this pattern is not new. “Are people talking themselves into there being another crash? Yes,” he says. “How often do they do that? Probably every two years, helped by whichever party isn’t in power.”

Rethinking Rates as Market Driver

If Newcombe’s assessment is accurate, it raises important questions about how real estate professionals and analysts interpret the market. Focusing on interest rates alone may miss the bigger picture, leading to mistaken diagnoses and ineffective policy responses.

For agents, client conversations should go beyond rate timing and focus on personal circumstances and risk tolerance. Many buyers waiting for lower rates may be expressing broader uncertainty, not financial hesitation. Addressing underlying concerns could be more productive than debating incremental rate changes.

For policymakers, the analysis suggests that lowering rates alone may not stimulate the market if uncertainty remains high. Efforts to increase economic and political stability, or at least improve consumer confidence, may be more effective than monetary policy adjustments.

Compass Arizona’s Pricing Strategy

Newcombe’s team at Compass Arizona has shifted its client communication to reflect this reality. Rather than focusing on locking in the lowest possible rate, the team emphasizes pricing strategy and market positioning based on current conditions.

“We are very clear about saying this is where we think the price should be,” Newcombe says. “And this is a snapshot – if your home’s on the market in a month, two months, three months, we’ll take a new snapshot each month and keep you updated.”

This approach prioritizes transparency and realistic expectations. Newcombe believes it builds trust and yields stronger outcomes than encouraging clients to wait for rate improvements that may never materialize.

Life Events Drive Future Sales

Newcombe expects uncertainty to dominate the market through at least 2026. Newcombe predicts that most transactions in the coming year will be driven by major life events, such as births, marriages, deaths, and children leaving for college, rather than financial calculations.

“I think we’re going to be in what I would describe as a ‘hatch, match, and dispatch’ market for the next year,” Newcombe says, referencing the key life transitions that drive moves regardless of broader market conditions or rate environment.

In this environment, buyers and sellers will need to focus on what they can control: understanding their own needs, staying realistic about pricing, and accepting that waiting for perfect conditions may not be practical. For real estate professionals, helping clients navigate uncertainty rather than chasing lower rates will be the key to success in Arizona’s evolving housing market.