September 17, 2026
The 30-year fixed mortgage rate recently exceeded 7%, the highest in a year according to Mortgage News Daily. Yesterday, the Federal Reserve raised the benchmark target fed funds rate by ¼ point, to 4%. Find out more about how Treasury Yields Affect Mortgage Rates.
How will this impact buyers and sellers of Paradise Valley homes? According to proprietary research, in the following four ways:
Fewer Transactions Overall
Higher interest rates make the cost of buying homes higher, thus reducing the number of homes that sell. This impacts Paradise Valley, as the rise in interest rates starting in 2022 show. A comparison between the number of homes sold year to date in 2026 to the same time period in 2021 showed a 40% reduction.
Specifically, between January 1, 2026 and August 31, 2026, there were 174 sales. During that same time period in 2021, there were 278 sales. That’s a 37.4% drop. (Study used MLS data, with the parameters of Town of Paradise Valley, single family homes with lots above .7 acres to eliminate condos.)
Other factors, such as the pandemic and other geopolitical and economic trends, also likely played a role. But a 40% reduction in sales is large enough that interest rates logically also played a role.
A Larger Drop in Financed Buyers
Further analysis revealed that, indeed, much of this decline was due to an almost 60% drop in the number of buyers using financing. Specifically, year-to-date in 2026, there were 64 financed sales. In 2021, during that same time period, 152 purchases were financed, or a 57% drop.
A Smaller Drop in Cash Purchases
The same research showed that the number of purchases using cash-only also declined, but not by as much. Year-to-date 2026 sales saw 110 using cash only, compared to 126 in 2021. That’s still a decline of 12.7%, but not as much of a drop as among financed sales. As expected, higher interest rates did not have as much of an impact on buyers who didn’t need financing.
A Greater Ratio of Cash Purchases
As a result of these trends, cash buyers now account for almost two-thirds of Paradise Valley sales. In other words, the percentage of cash transactions year-to-date was 63.2%, compared to 45.3% in 2021.
In a Nutshell
The Federal Reserve projected it may raise rates again in its fight to tame inflation. This affects variable rate mortgages directly, and fixed-rate mortgages indirectly via its impact on Treasury yields. If rates continue to increase, expect the number of financed purchases in Paradise Valley to decline, and the ratio of cash purchases to increase.
How It Affects Buyers
Cash buyers are in a more competitive position relative to buyers who need financing. They can close more quickly, since they don’t have to wait for financing. That means buyers who use financing may need to make other terms of their offer more attractive to compete with an otherwise comparable cash offer.
How It Affects Sellers
Sellers should consider their ability to close quickly to attract cash buyers. To attract financed buyers, sellers may want to consider concessions that reduce the buyer's borrowing cost rather than relying on a price reduction.
