Arizona's Wage Growth Soars: 6th Fastest in the Nation

Arizona continues to demonstrate strong economic momentum, ranking sixth in the nation for wage growth. According to the latest Quarterly Census of Employment and Wage (QCEW) report from the U.S. Bureau of Labor Statistics (BLS), Arizona's average weekly wages rose by 5.5% over the year in September 2024. This notable increase reflects the state's robust employment market and economic resilience.

Arizona's Wage Growth in Context

Arizona's wage growth of 5.5% places it ahead of most states but behind the leaders: Wyoming (6.5%), the District of Columbia (6.3%), Hawaii (5.8%), Massachusetts (5.6%), and Washington (5.6%). In contrast, states such as Rhode Island (2.5%), Michigan (3.0%), and New Jersey (3.2%) experienced the slowest wage increases (U.S. Bureau of Labor Statistics, 2024).

Maricopa County: A Closer Look

Maricopa County, the largest county in Arizona, plays a crucial role in driving the state's economic performance. In September 2024, jobs in Maricopa County increased by 0.1% year-over-year, ranking seventh among the nation's ten largest counties. Despite modest job growth, the county showed strong wage gains, with average weekly wages rising by 5.1%.

Among major counties, King County, Washington led the way with a 6.8% increase, while Dallas County, Texas posted the slowest wage growth at 2.9% (U.S. Bureau of Labor Statistics, 2024).

Housing Market Trends in Arizona

While wage growth in Arizona remains strong, the state's housing market presents a mixed picture. Phoenix home prices decreased slightly in December 2024 but still showed a 2.1% increase on a year-over-year basis. Nationally, home prices increased by 3.9% during the same period, with the 20-city composite posting a higher 4.5% annual growth rate (S&P CoreLogic Case-Shiller Indices, 2024).

Arizona's housing price appreciation lagged behind most other states, with a 1.2% increase in the fourth quarter of 2024, ranking 49th nationally. Only Louisiana (0.5%) and Mississippi (-0.2%) reported lower gains. By comparison, the Middle Atlantic and New England regions experienced the largest increases, with Connecticut, New Jersey, and Wyoming leading at 8.3% (Federal Housing Finance Agency, 2024).

Building Permits Decline in Arizona

Despite wage growth, Arizona saw a substantial decline in building permits. In January 2025, the state experienced a 34.1% decrease in building permits issued compared to the previous year. Single-family unit permits also fell by 6.2%. This trend was most pronounced in the Phoenix metropolitan area, where total permits dropped by 69.4%, while the Tucson metropolitan area saw a 15.8% decline (O'Kray-Murphy, 2025).

Housing Affordability Outlook

While housing affordability remains a national concern, Arizona still offers promising opportunities for homebuyers. According to the National Association of Homebuilders (NAHB)/Wells Fargo Cost of Housing Index, in the fourth quarter of 2024, a typical family in the U.S. earning a median income of $97,800 needed 37% of their income to afford a mortgage on a median-priced existing home. This figure was slightly lower than the third quarter's 38%, reflecting improved affordability conditions.

In Phoenix, families required 39% of their income to cover mortgage costs, while Tucson matched the national average of 37%. Although these figures are slightly above the national benchmark, Arizona remains more affordable than many coastal cities. This relative affordability, coupled with rising wages, positions the state as an attractive market for new homebuyers and real estate investors alike.

Compared to the most affordable areas like Decatur, IL (16%) and Springfield, IL (17%), Arizona's affordability is higher. However, it is far more accessible than high-cost regions such as San Jose-Sunnyvale-Santa Clara, CA, where families need 87% of their income to afford a mortgage (Rice, 2025).

The combination of steady wage growth and moderate home price increases offers a favorable climate for those seeking long-term housing investments in Arizona.

Conclusion: A Balanced Economic Picture

Arizona's strong wage growth demonstrates a thriving job market and economic resilience. While housing affordability poses some challenges, the state's rising wages and more manageable home price increases present promising opportunities for homebuyers and investors.

With Maricopa County contributing significantly to the state's performance, Arizona remains a compelling destination for those seeking a balance of economic opportunity and affordability. Policymakers and industry leaders can continue building on this foundation to ensure sustained growth and long-term prosperity.

References
Federal Housing Finance Agency. (2024). Quarterly House Price Index.

National Association of Homebuilders (NAHB)/Wells Fargo. (2025). Cost of Housing Index.

O'Kray-Murphy, D. (2025). Building Permit Trends in Arizona.

S&P CoreLogic Case-Shiller Indices. (2024). U.S. National Home Price NSA Index. 

U.S. Bureau of Labor Statistics. (2024). Quarterly Census of Employment and Wages.