- Large home-buyers have reversed their spending-spree since the pandemic housing boom.
- Institutional investors bought 90% fewer homes in the first two months of 2023 compared to a year ago.
Some of the biggest US home buyers are backing out of the housing market as it undergoes shifts in affordability and rent dynamics.
A recent analysis from$4 found that institutional investors who own more than 1,000 homes purchased 90% fewer homes in January and February of this year compared to 2022.
That trend accelerated from the fourth quarter, when institutional home-buying activity slumped 79% from a year ago, according to $4.
Among the institutional investors, American Homes 4 Rent was a net seller of homes in the first quarter, buying 312 single-family homes and shedding 666, per Fortune. A year earlier, when borrowing costs were lower, the company bought over 1,100 and sold 171.
Similarly, Invitation Homes — the largest owner of single-family rentals in the US — was a net seller in the first quarter. It bought 194 homes and sold 297, whereas a year ago those figures were at 822 and 147, respectively.
The Federal Reserve's aggressive campaign has sent rates higher over the last year, and for institutional investors, the upside on each new home purchase isn't what it was compared to before.
Rent growth has also slowed in that stretch, and when paired with still-high home prices, big buyers are staying on the sidelines until the market becomes more attractive.
Yieldstreet, which owns over 700 single-family properties, has yet to buy a single home in 2023 and told Fortune that short-term rates would have to fall to around 4% and home prices would have to dip about 15% below 2022's peak for the company to resume buying.
Broadly, higher rates have left Americans unwilling to buy new houses and refinance. $4, Pantheon Macroeconomics said. Separate data from Realtor.com showed that new home listings were down more than 20% from a year ago.