Although the U.S. housing market may have slowed during the second quarter of the year, investors did not take their foot off the gas.

The number of home purchases by investors rose 3.4% year over year in Q2 2024, the largest increase since Q2 2022, according to a report published Thursday by Redfin.

In comparison, total U.S. home purchases fell 1.9% during the same period, which Redfin attributed to elevated mortgage rates and home prices. While investors are still sensitive to mortgage rate changes, they are less sensitive than consumer buyers as 69% of investors pay in cash.

The study is based on an analysis of county-level home purchase records across 39 of the most populous U.S. metro areas going back to 2000. Redfin said it defines an investor “as any institution or business that purchases residential real estate, meaning this report covers both institutional and mom-and-pop investors.”

In total, investors purchased $43 billion worth of homes in the second quarter, up 13.7% year over year, which was also the largest gain in two years.

Redfin found that investors purchased 16.8% (roughly one in six) of homes sold during the second quarter of 2024, up from 16% a year ago. This is the highest second-quarter share on record aside from 2022 (20.8%).

Redfin said the Q2 2024 data shows that investor activity is stabilizing after more than doubling during the 2021 pandemic-fueled homebuying boom. It then plunged nearly 50% in 2023 due to declining rents and home values in some markets.

Although demand for rentals remains strong, rent prices have shown slow growth due to a bevy of new apartments hitting the market, creating competition for tenants. But multifamily construction starts have slowed, which is good news for landlords looking to increase rents.

Redfin attributes this uptick to investors being quicker to come off the sidelines than consumer buyers.

“One reason real estate investors are coming out of hibernation is to take advantage of robust demand from renters,” Redfin senior economist Sheharyar Bokhari said in a statement.

“Elevated home prices and mortgage rates have pushed homeownership out of reach for a lot of Americans, which is fueling demand for rentals. Investors, many of whom can afford to pay in cash to avoid the sting of high mortgage rates, are cashing in on that demand.”

Additionally, the brokerage noted that the increase in investor activity is being driven by single-family home purchases, which were up 6.7% annually in Q2 2024. In contrast, investor purchases of multifamily properties (two to four units); condominiums and co-ops; and townhouses fell by 5%, 3.3% and 1.9%, respectively.

In total, single-family homes represented 69.4% of all investor purchases in Q2 2023, the highest share since mid-2022. Condos and co-ops accounted for 19.4%, followed by townhouses (6.5%) and multifamily properties (4.7%).

Redfin noted that investors typically prefer single-family properties as this segment of the market has posted relatively strong rent growth and lower tenant turnover rates.

Supporting this data is a recent report from the Mortgage Bankers Association (MBA), which found that multifamily lending declined 49% to $246 billion in 2023.

“Multifamily lending fell by roughly half in 2023 as sales transactions declined and far fewer property owners sought to refinance their loans,” Jamie Woodwell, the MBA’s head of commercial real estate research, said in a statement.

When it comes to return on investment (ROI), Redfin reported that the typical home sold by an investor in June sold for 58% more than the investor bought it for, down from 62.1% a year prior but still above pre-pandemic levels. Only 5% of homes sold by investors incurred a loss, down from 5.8% in Q2 2023 and below pre-pandemic levels.

This can at least be partially attributed to the fact that investors purchased 24.1% of low-priced homes that sold in Q2 2024, up from 22.7% a year prior. In comparison, 14.7% of high-priced homes and 12.1% of mid-priced homes that sold were purchased by investors.

Low-priced properties — which Redfin describes as those that are priced in the bottom one-third of the local market — made up 45.2% of all investor home purchases in the second quarter. High-priced homes and mid-priced homes accounted for shares of 30.9% and 23.9%, respectively.

Among the individual markets analyzed, San Jose and Las Vegas had the largest yearly increases in investor home purchases (up 27%). Three other California metros — Sacramento (+18.9%), Los Angeles (+17.9%) and San Francisco (+17.8%) — rounded out the top five.

The San Jose metro area also saw the largest overall increase in home purchases in Q2 2024, up 15.2% year over year, while the San Francisco metro area recorded the largest annualized increase in investor ROI on properties sold in June. The typical San Francisco home sold by an investor went for $685,500 more than the initial purchase price, up 50.7% from a year prior.

“San Jose has a lot of overseas investors buying sight-unseen, and a lot of home flippers who are purchasing dilapidated homes, putting some lipstick on them, and selling them for a profit,” Craig Pellegrini, a Redfin Premier agent in San Jose, said in the report.

“I’m also seeing parents buy second homes that they plan to rent out for a while and then pass on to their kids, some of whom just graduated college and can’t afford to buy themselves. There are a lot of folks with tech money who bought homes here in the early 2000s, built a ton of equity, and are now taking on a side hustle as a real estate investor. But there are also folks who are renting in neighborhoods like Mountain View and Los Altos, and then buying investment properties in San Jose — which has lower home prices — to build equity.”

At the other end of the spectrum, investor home purchases fell the most year over year in Fort Lauderdale, Florida (-15.9%); Providence, Rhode Island (-12.4%); New Brunswick, New Jersey (-11.9%); Miami (-11.3%); and Chicago (-11.1%).

“Even though rents are high here, the insurance rates and property taxes are also high, making it difficult for the numbers to make sense for investors,” Bob Benson, a Redfin Premier agent in Fort Lauderdale, said in the report.

The markets of Miami (28.5%); San Diego (23.7%); Anaheim, California (23.3%); Las Vegas (22.3%); and Los Angeles (22.2%) had the highest shares of investor home purchases in Q2 2024. Conversely, Providence, Rhode Island (8.5%); Washington, D.C. (8.7%); Warren, Michigan (9.2%); Montgomery County, Pennsylvania (9.5%); and Seattle (9.7%) had the smallest shares.