The real estate sector has been struggling. Home sales have dropped for nine straight months, driven by surging mortgage rates, and new data reveals that investors are now pulling back — even more than traditional homebuyers.
According to real estate brokerage Redfin, home sales to investors plunged 30% annually in the third quarter of this year. That’s the biggest drop in investor sales since the Great Recession over a decade ago, aside from the first two months after the onset of the COVID pandemic.
The drop in investor sales outpaced the drop in overall home purchases, which were down roughly 27% in the third quarter.
While non-investor homebuyers are facing much higher mortgage rates and a shortage of affordable homes for sale, investors tend to use cash more often than not, so they’re not quite as influenced by mortgage rates.
However, investors are influenced by home prices. Home prices are still higher compared to a year ago, but the annual gains are shrinking at an unprecedented pace. The S&P CoreLogic Case-Shiller national home price index was up 13% in August, the most recent reading, but that was down from a 15.6% annual gain in July.
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