Real estate investors are pulling back from the housing market with home buying down 30%, report says
- Investor home buying has fallen 30% in a year, according to the Wall Street Journal.
- Institutional investors piled into America's housing market after the pandemic.
Investor home buying has fallen 30% over the past year as high prices and rising interest rates cause companies to pull back from the US housing market, according to a report.
Redfin data cited by the Wall Street Journal showed that companies bought 66,000 homes across 40 markets in the third quarter of 2022, compared to 94,000 during the same period last year.
Those declines come after a two-year period that saw investors pile into the US housing market, taking advantage of a rise in demand for properties in the suburbs.
Investors were buying one in every five homes by the start of this year, but a combination of rising interest rates and elevated prices is now driving a market slowdown.
The Federal Reserve has tightened rates from near zero in March to a range of 3.75% to 4% today, pushing mortgage rates higher and curbing demand for housing. The US central bank has hiked rates in a an effort to cool inflation, which soared to a 40-year high of 9.1% in June, and remained close to 8% in October.
"A decline in home buying is one of the byproducts of tighter monetary policy," Macquarie's head of economics told Insider. "Housing is an interest rate sensitive sector so it is no surprise that it has slowed materially in the current context."
House prices have remained buoyant despite that fall in sales, even as analysts warn of a 20% crash next year.