The share of home purchases made by investors continues to outpace pre-pandemic levels, though purchase volumes remain below the 100,000-monthly sales threshold averaged by investors in 2021 and 2022.

Investor share declined from a six-year peak of 32% of single-family home purchases in January 2025 to 29% by the end of June, according to a recent report by Cotality, a real estate technology and market analytics firm. Investor purchase share oscillated between 15% and 20% prior to 2020.

Rental demand supported by sidelined owner-occupied buyers has helped sustain their purchase share amid difficult market conditions through the first half of 2025. In the second quarter of this year nearly 3 in 10 home sales went to investor buyers.

“They’re able to pick up these properties because they flat out just don’t have the competition from owner-occupied buyers,” says William Fisher, director of wholesale sales at Dominion Financial Wholesale. “Offers are being made a day or two more slowly than at the beginning of the summer, but investors are still buying.”

Exhibiting resilience in today’s high-price, high-rate environment, investors purchased an average of 85,000 homes per month through the first half of 2025, mirroring the 84,000 monthly average from the first half of 2024.

Through the first six months of 2025, the metropolitan statistical areas boasting the largest volumes of investor purchases were Dallas (21,842), Houston (18,324), Atlanta (15,536), Phoenix (12,640) and Los Angeles (11,130), according to Cotality.

“There are owner-occupied buyers not buying. They’re renting,” explains Thom Malone, principal economist at Cotality and author of the report. “That drives rental demand up and gives more market power to investors. They have more leeway to raise rents on the back end, shielding them from affordability issues that way as well.”

Borrowing costs projected to stay elevated through the end of 2025 will likely maintain purchasing pressure on owner-occupied buyers. The Mortgage Bankers Association forecasts 30-year mortgage rates will remain between 6.5% and 7% through the end of the year, and Fannie Mae projects mortgages rates above 6% through the end of 2026.

Outsized growth from medium-sized investors

Cotality defines home investors as buyers owning three or more properties, with small investors being those owning fewer than 10 properties, medium investors owning 10 to 99 properties, large investors owning 100 to 999 properties and mega investors owning more than 1,000 properties.

While small investors remain the most common investor type, with 14% market share in June, medium-sized investors have spurred the recent increase in investor activity, managing to grow their market share to 10% in June 2025 from 6% in June 2024. Large investors accounted for 3% of purchases, and mega investors just 2%.

Medium-sized investors have grown market share in the past six months by nature of their position in the market, acting a little like the cash-rich large investors, and a bit like the less-diversified small investors, too.

“They’re more likely to be using cash, but they’re also more likely to probably just have real estate,” Malone explains. “Rental demand has been raised, but it doesn’t look relatively as good for the big investors, and small investors have some of the same affordability troubles that owner-occupied buyers do.”

U.S. home prices failing to keep pace with broader inflation for the 12 months ending in June has eroded American housing wealth in real terms for the first time in years. With softening valuations, some home investors are positioning themselves for buying opportunities.

“Of course they need an exit strategy,” says Victor Kuznetsov, founder and managing partner of Imperial Fund Asset Management, the securitization partner of non-QM lender AD Mortgage, “but demand for housing isn’t being met and investors are filling that gap.”

Estimates vary, but the median age of U.S. housing stock is roughly 40 years old. In much the same way that an aging U.S. population increases demand for ophthalmologists to perform cataract surgery, aging housing stock increases demand for fix-and-flip investors and liquidity partners financing residential transition loans (RTLs).

“RTLs have been very, very popular over the past 12 months,” Kuznetsov says. He notes that demand for whole loans, especially debt-service coverage ratio (DSCR) loans commonly used to buy single-family rental properties, is also not being met, given declining transaction volumes for owner-occupied homes.

“Insurers and aggregators have been very, very aggressive bidding on DSCR pools because of the slower prepayment speeds,” leading to wider profit margins for mortgage lenders who originate them, Kuznetsov says. Prepayment penalties on DSCR loans extends their shelf life on balance sheets by slowing prepayment speeds.

“Whole loans are a very good product for life insurance companies to have on their balance sheet, and DSCR loans because of the prepayment speeds and good capital treatment,” Kuznetsov says.

Strong DSCR demand meets a softening market

Cotality reports that the metro areas boasting the largest overall investor purchase share through the first six months of 2025 were Los Angeles (44.2%); El Paso, Texas (42.8%); Atlanta (39.8%), Memphis, Tenn. (37.6%); and San Diego (37.2%).

John Wise, executive vice president of national production at Newfi Wholesale, observed strong purchase demand among small investors through the first half of 2025. Among medium to large investors, the volume of cash-out refinances has increased in recent months.

Wise sees two drivers of that trend. Investors are looking to capture maximum equity in a softening market. At the same time, they want to build strong cash positions should home prices fall and mortgage rates decline heading into 2026.

Any marked improvement in mortgages rates, though, could spark a surge of competition from owner-occupied buyers, putting upward pressure on prices.

“There is significant pent-up demand from the past three years,” says Wise. “The trend will shift if rates come down to where people who are renting just can’t wait to purchase anymore.”

For now, investor buyers face the greatest competition from others in the space, says Fisher of Dominion Financial Wholesale, who has also noticed an uptick in cash-out refinances from investors still hungry to buy.

“A lot of people are chasing the same paper now,” he says. “Some of the well-established lending criteria is being experimented with, in things like title seasoning and appraisal seasoning, which pushes up valuations.”

Fisher has observed that so-called “guideline expansion” accelerating within the past six months. He warns that declining rates could trigger a wave of refinances within the prepayment window among investor buyers, triggering costly penalties for lenders selling investor loans to aggregators and investment firms, especially among smaller, less-diversified non-qualified mortgage (non-QM) lenders.

“We’re seeing a ton of DSCR demand because terms are getting easier,” Fisher continues. “You have companies funding $300 million to $500 million a month, with half of that being DSCR. If rates drop by any significant amount, refinances could put some of these non-QM lenders out of business.”

Rising yields on U.S. Treasurys, on the other hand, could put upward pressure on mortgage rates and additional downward pressure on home prices.

“There’s more pressure on values than we’ve seen in a while, and you have to be careful with values, especially for cash-out refis,” says Wise of Newfi Wholesale, “but to be cash-rich in a softening market is where investors might want to be.”