More bad news for home buyers: Real-estate investors are seizing an opening and ramping up purchases

By Aarthi Swaminathan

Home-buying activity by investors is picking up. They're targeting affordable housing markets.

Real-estate investors are paying premium prices for homes in affordable hot spots across the U.S.

As home buyers shy away from the housing market, real-estate investors are seizing the opening and ramping up their purchases.

In the third quarter of 2025, 30% of single-family homes were bought by investors, according to data from Cotality, a real-estate data company. The company defines an investor as a buyer owning three or more properties.

A year ago, that share was a little lower, at 27%. But starting in January, investors accelerated their purchases.

The gradual increase in investor activity comes at a time when the housing market remains in a deep freeze. Many home buyers are shut out of the market due to elevated mortgage rates and home prices.

Many homeowners are struggling to sell their homes, as buyers are getting more picky. Uncertainty about the economy and the job market is also putting some people off the idea of buying a house right now.

As home sellers get frustrated with the slow pace of sales, investors are stepping in to fill the gap.

"Buyers continue to struggle to meet sellers' price expectations, which is contributing to rising inventory levels and longer periods spent on the market," Cotality said.

These conditions are "incentivizing investors to capitalize on potential bargains from motivated sellers by acquiring homes," the company added.

Investors have been increasingly active in relatively affordable markets. A separate report from real-estate platform Realtor.com found that investors were most active in states such as Missouri, Mississippi and Nevada, where home prices are typically lower than the national average. Nearly two in 10 home purchases in Missouri were made by an investor, Realtor.com found.

Realtor.com's data were as of the second quarter of 2025. Real-estate investors were defined as absentee-owner buyers or sellers with names that contained terms such as LLP, LP, LLC, GP or Trust.

Among the biggest 50 metropolitan areas in the U.S., the top target for real-estate investors was Memphis, Tenn.-Miss.-Ark., where one in four homes were purchased by investors. That was followed by St. Louis, Mo.-Ill., and Kansas City, Mo.-Kans.

Investors are also paying far more than everyday home buyers. In several states, the median investor purchase price was significantly higher than the state's median sales price, Realtor.com said. In Utah, investors paid 35% more for a property than did typical home buyers, while they paid 23% more in California and 12% more in New York.

There are a few possible reasons investors are coughing up so much money for these homes. They may be planning to turn them into high-end rental properties or short-term rentals, like Airbnbs, in certain markets, Realtor.com said - or they're simply competing in a market with very limited inventory, such as in California or New York.

Those investors could be squeezing out everyday home buyers.

"With affordability still stretched and inventory tight, many would-be buyers remain sidelined, giving investors a larger share of the market and, in some areas, more influence over prices," Danielle Hale, chief economist at Realtor.com, said in a statement.

"As a result, investor activity can amplify price pressures, especially in markets where their purchases concentrate in already competitive price ranges," she added.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

-Aarthi Swaminathan

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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11-06-25 0600ET