U.S. real estate investors purchased 47,004 homes in the fourth quarter, the lowest level for that time of year since 2016. That’s down 3.9% from a year earlier, the biggest decline in a year.

This is based on a Redfin analysis of county-level home purchase records across 39 of the most populous U.S. metropolitan areas going back through 2000. We define an investor as any institution or business that purchases residential real estate, meaning this report covers both institutional and mom-and-pop investors. This data is seasonal, which is why we compare Q4 2024 to other fourth quarters. Please see the end of this report for a more detailed methodology. 

There are several reasons investor activity is declining:

• Slowing housing market. Investors are buying fewer homes for some of the same reasons other people are buying fewer homes: High home prices and high mortgage rates. Overall pending U.S. home sales fell to their lowest level on record in January, aside from the start of the pandemic. 
• Tepid demand. Home-price growth has started to slow, inventory has started to rise, and homebuying demand is lackluster. That makes some investors cautious about buying real estate to flip it and try to earn a profit. Rents have also plateaued after a boom in apartment construction, meaning it’s less lucrative than it used to be for investors to purchase units to rent out. 
• Economic uncertainty. Real estate investments are riskier than before, with economic and political uncertainty in the air. Recession nerves, the transition to a new presidential administration, and instability surrounding key economic measures like inflation, tariffs and jobs have made some investors pull back on housing. They may be shifting to other investments that are viewed as more stable, like bonds. 
• Elevated interest rates. The Fed has kept interest rates high. That means mortgage rates remain high, making it more expensive for investors who are taking out a loan to buy homes. Investors are less sensitive to mortgage rates than regular homebuyers because most investors (65%) pay in cash, but they’re still somewhat sensitive because they often take out different types of loans to cover home-flipping costs and other expenses. 

Redfin agents in some parts of the country report that investors are quiet because they’re not seeing the rate of return that they were two or three years ago. In some cases, investors even worry about having to sell at a loss.

In dollar terms, investors purchased $36.5 billion worth of homes in the fourth quarter. That’s up 6.3% year over year, equal to the increase in home-sale prices over that period. 

While investor purchases are declining, they’re not falling nearly as fast as they were in late 2022 and early 2023. At that time, rapidly rising mortgage rates were stalling homebuying demand, making it more expensive to purchase homes and less appealing to flip them.