The percentage of all-cash sales remained unchanged from September to October but was down by 3 percentage points over the year, and the share of homes purchased by institutional investors dropped right along with it, according to data released on Monday by the National Association of Realtors. NAR’s October 2015 Existing-Home Sales report showed that all-cash sales accounted for slightly less than one-quarter of all residential home sales in October. Institutional investors purchased 13 percent of those homes during the month, which is down by 2 percentage points from October 2014.
Institutional investors typically account for much of the cash sales share; in October, 62 percent of investors paid cash for a home. REO properties sold for an average discount of 18 percent below market value in October, which was a slight increase from 17 percent in September. Short sales were discounted much less in October compared to the previous month, however, from 19 percent down to 8 percent. While those numbers have consistently been on the decline year-over-year since peaking in 2010, they are still well above pre-crisis levels.
Single-family homes that are built and held for rental purposes are just one small piece to a much larger picture of the housing market. Construction in this sector has risen significantly over the last year, but caution must be taken when looking at trends in the single-family rental market as starts are still disappointing. Housing starts among single-family homes built-for-rent increased to approximately 9 thousand for the third quarter of 2015, up from about 7 thousand during the third quarter of 2014, data from the U.S. Census Bureau’s Quarterly Starts and Completions by Purpose and Design and National Association of Home Builders analysis showed.