Real estate investors are significantly increasing their acquisitions of single-family homes across the United States, reaching a new high in a market where many traditional buyers are sidelined. In the third quarter of 2025, investors purchased 30% of all single-family homes, a notable increase from 27% during the same period last year.
This trend highlights a major shift in the housing landscape, as elevated mortgage rates and persistent high prices continue to challenge everyday homebuyers. With sellers growing more motivated, investment firms and individuals owning multiple properties are stepping in to capitalize on the opportunity.
Key Takeaways
- Investor purchases of single-family homes rose to 30% in the third quarter of 2025.
- Activity is highest in affordable markets, with Memphis, St. Louis, and Kansas City leading among major metro areas.
- Investors are often paying above-market prices, particularly in high-cost states like Utah and California.
- The trend could increase price pressure on regular homebuyers in competitive areas.
A Challenging Market for Homebuyers
The current housing market remains difficult for many Americans. A combination of high borrowing costs and home prices that have yet to significantly decrease has pushed many potential buyers out of the picture. This has led to a slowdown in sales, leaving many properties on the market for longer than expected.
Home sellers are facing a new reality where bidding wars are less common and buyers are more selective. This growing frustration among sellers creates an opening for cash-rich investors who can close deals quickly and are less dependent on traditional financing.
Defining a Real Estate Investor
Different data providers use slightly varied definitions. Cotality, a real estate data firm, defines an investor as any individual or entity that owns three or more properties. Another platform, Realtor.com, identifies investors as absentee owners or entities with names including terms like LLC, LP, or Trust.
Investors Fill the Gap Left by Families
As traditional buyers hesitate, investors have accelerated their purchasing activity, particularly since the beginning of 2025. They are actively seeking opportunities where sellers may be more willing to negotiate on price or terms due to a lack of other offers.
According to real estate data company Cotality, these market conditions are “incentivizing investors to capitalize on potential bargains from motivated sellers by acquiring homes.” This dynamic suggests that investors are not just buying property, but are strategically targeting homes that might otherwise struggle to sell in the current climate.
“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,” said Danielle Hale, chief economist at Realtor.com.
Focus on Affordable Markets
While investor activity is a national trend, it is particularly concentrated in more affordable regions of the country. States like Missouri, Mississippi, and Nevada have seen a significant influx of investor purchases, where home prices are generally below the national average.
Data from the second quarter of 2025 revealed that nearly two in ten homes sold in Missouri were purchased by an investor. This focus on lower-cost markets allows investors to acquire more properties and potentially generate higher rental yields.
Top Metro Areas for Investors
Among the 50 largest metropolitan areas in the U.S., the highest concentration of investor activity was found in:
- Memphis, TN-MS-AR: One in four homes (25%) purchased by investors.
- St. Louis, MO-IL: High investor share, following closely behind Memphis.
- Kansas City, MO-KS: Another Midwestern hub attracting significant investment.
Paying a Premium in High-Cost States
Interestingly, in some of the nation's most expensive markets, investors are paying significantly more than the average homebuyer. This suggests a different strategy is at play in these areas compared to the focus on bargains in affordable regions.
Analysis shows a wide gap between what investors and typical buyers pay in certain states:
- In Utah, investors paid 35% more than the median sales price.
- In California, the premium was 23%.
- In New York, investors paid 12% more.
Experts suggest several reasons for this behavior. Investors in these high-demand areas may be planning to convert properties into luxury long-term rentals or lucrative short-term vacation rentals like Airbnbs. They may also simply be competing for a very limited supply of available homes, driving prices up in the process.
What This Means for the Average Buyer
The rise in investor activity has direct consequences for regular homebuyers. As investors command a larger share of the market, they can exert more influence over pricing, particularly in certain neighborhoods or price brackets.
Danielle Hale of Realtor.com warned that “investor activity can amplify price pressures, especially in markets where their purchases concentrate in already competitive price ranges.” This means that even as the broader market cools, first-time and middle-income buyers may find themselves competing with well-funded investors for the same limited pool of homes, potentially keeping prices stubbornly high in desirable areas.
