While the third quarter will be the true test of the 21st Century ROAD to Housing Act's impact on investor purchases of single-family homes, indicators show a pullback beginning as it was being debated, Cotality said.
But local real estate investors are filling the void, fueling a fresh wave of demand for
Mega-investors, the ones who own 1,000 or more properties actually had a bigger portion of this group's share at 1.7% in June from 1.3% in February and March. But in December 2025, they were 2.6% of the market and this started declining as the ROAD Act was being debated.
In June, the small investors, those with three-to-nine properties owned, had a 14.3% portion of the 27% total share. The medium category, between 10 and 99 properties, had a 9% share.
Large investors, owners with between 100 and 999 properties, had a 2.2% share.
Business-purpose lenders should be looking at activity levels from the second quarter as well as today to gauge the impact when the rules go into effect in the first quarter of 2027.
While the investor share ended the second quarter at 27%, one percentage point lower than three months earlier, the "more compelling story" comes up when one looks at
"Investors executed roughly 40,000 fewer purchases compared to the second quarter of 2025, with mega investors accounting for about 10,000 of that decline," Malone said in a press release. "That represents a significant drop given their small market presence, suggesting that proposed restrictions on institutional investors had an immediate chilling effect."
The ROAD Act became law without President Trump's signature on July 11, although its provisions regarding institutional investors do not take effect until Jan. 7, 2027. Morningstar DBRS recently issued a report looking at the effects on
Second quarter market share changes followed historical seasonality, Cotality said. For the current period, having clearer regulations in place regarding non-owner occupant purchases of single-family homes might bring institutional investors back; private equity firms might move into other types of assets, the Cotality report said.
For lenders who currently or are looking to enter the business purpose loan market, Cotality notes in either case regarding the above options, "smaller local investors are ready to take available investments. Due to ongoing affordability issues, strong demand for rentals ensures that investors at all levels will play an important role in market liquidity."
In a November 2025 interview with National Mortgage News, Ben Fertig, president of Constructive Capital explained how
"Investor products, both DSCR rental loans and residential transitional loans, have proven less rate-sensitive than conventional first mortgages," Fertig said.
"The true test will occur in the third quarter, now that the legislative framework and exemptions are finalized," Malone said. "We will see whether this was a permanent retreat or just a pause while investors waited for a clear path forward."
In June 2025, non-investors purchased 272,820 properties, the most active month for the year. This June was also the most active at 251,646.
Investors of all sizes purchased 105,531 during June a year ago, also the best month. While once again, June was this year's best month so far, as investor purchases for the period totaled 93,320.
