Institutional Investors Are Quietly Returning to the Housing Market

Institutional investors are kicking the tires in the American housing market once again.

Investors who own more than 1,000 homes accounted for 2.2% of the share of home sales in August, up from 1.4% in February, according to new data from real estate analytics firm Cotality.

The rebound came as Congress finalized legislation impacting large institutional investors in the housing market, bringing regulatory clarity to the sector.

In January, President Donald Trump signed an executive order to discourage investors from benefiting from federal assistance in home purchases. Congress codified further limitations in the 21st Century Road to Housing Act that became law in July. That bill targets investors who own more than 350 properties. After some wrangling, it excludes the build-to-rent industry.

Small investors, though, tend to have a far larger presence in the housing market, Realtor.com® found. But large investors are concentrated in some large markets where they account for a significant share of the housing stock, Realtor.com found.

Realtor.com economist Hannah Jones says climbing mortgage rates are weighing on the market, and that's sent some individual buyers to the sidelines, potentially boosting the investor share.

"Investors, especially institutional ones, are less reliant on financing and more often pay in cash, which could nudge the institutional investor share higher as the surrounding market contracts," Jones says. "It's also possible that institutional activity slowed while policy was unclear and in flux, and that these investors have returned now that it's settled."

Thaw in the market

The big question now is whether these deals are just clearing a backlog that the executive order created, or whether investors are returning for the long haul.

It's also not clear whether the number of large investor purchases is rising, or whether they are simply grabbing a larger share of total transactions as other types of buyers fall off. Realtor.com will have its own investor report out later this month, with more details.

"In the coming months, transaction volume will be important to watch. It should show whether institutional activity is truly growing or whether the rest of the market is simply shrinking around them while they continue to compete," Jones says.

Cotality's data also doesn't indicate in which cities investors are buying again. But in earnings calls, large build-to-rent companies say the industry is thawing.

The housing bill's passage provided certainty to large investors, especially in the build-to-rent space. It also gave them the ability to consolidate existing rental portfolios, Bryan Smith, CEO of American Homes 4 Rent, told analysts in August.

"As most everyone knows, the consolidation environment this year was really on pause with all the legislation and the attention from Washington," Smith said. "There were a couple of deals that closed in January. And then, it really was in a little bit of a wait-and-see. Post-legislation, we've seen a little bit more activity. There are some deals that are coming."

Now, he says, demand remains "healthy." But Smith also said on the call that mid-sized investors might face a more difficult environment for purchasing new properties. The exact rules codifying the investor restrictions are still being written.

Dallas Tanner, president and CEO of Invitation Homes, said on the company's latest earnings call that capital for deals was "relatively stagnant over the first six months of 2026, thanks to the legislative uncertainty."

"With the Road to Housing Act now settled, more sellers are coming to market," he said. "Including some attractive smaller portfolios. It's still early, but encouraging."

Evolution in product type

The share of home sales to all investors (including small mom and pop outfits) ticked up slightly to 11.3% in 2025, up 0.3 percentage points compared to the year before, the last Realtor.com® investor report shows. In total, investors bought 534,000 homes, and the median investor purchase amount rose 5.6%. 

Just after the bill became law, the Government Accountability Office showed that some cities saw investors rapidly grow their portfolios, for instance in Dallas and Phoenix, where investors bought thousands of units especially from 2020 to 2023. But the level of that activity slowed in 2024.

For institutional investors, the pause might have been a good chance to reevaluate their strategies. And for many, that's meant a look at other real estate assets, like multifamily rentals.

Ivan Barratt, CEO of Indiana-based private equity firm BAM Capital, tells Realtor.com that the new constraints on single-family investors have brought more attention to multifamily housing. BAM has acquired 10,000 apartments in the past decade. He doesn't see consumers losing interest in renting.

The National Association of Realtors' data shows first-time homebuyers are trending older. That means people are renting longer. But that drives demand for more upgraded and larger units. Companies owning both multifamily and single-family rentals can get ahead if they invest in amenities and upgrades, Barratt says.

"A first-time homebuyer is going to be dropping a $1,000 or $2,000 expense out of pocket, and so renting can feel more like a home where everything's taken care of," Barratt says.

Built-to-rent investors pick up

The single-family build-to-rent industry was rocked by a version of the bill that, at one point, penalized build-to-rent alongside other institutional investors. Also known as BTR, this kind of housing exploded during the COVID-19 pandemic and peaked at over 122,000 starts in early 2024, according to the National Apartment Association.

The National Association of Homebuilders found in August that the build-to-rent industry recorded 15,000 starts in the second quarter, a notable decline from the 18,000 reported at the same time in 2025. Occupancy was 92.6% in the second quarter. NAHB and others lobbied to prevent the bill from punishing build-to-rent, since it contributes to housing supply.

Kelli Lawrence, CEO of Indianapolis-based build-to-rent developer Onyx+East, says capital markets slowed down sharply as Congress debated the housing bill earlier this year. Since then, the money has started flowing again. Onyx+East just expanded into the Columbus, OH, market with a 23-unit build-to-rent project.

The exposure from the housing bill helped people understand the housing type. Lawrence says demand in cities like Columbus comes from a wide range of sources—grad students moving for school, people relocating for new jobs, and downsizing, for instance. For these stages in life, renting a home means space and flexibility.

"The long-term demand and need never went anywhere," Lawrence tells Realtor.com. "So it was just a matter of educating lawmakers and who we are and what we do."