Individual investors and second-home buyers accounted for 20% of September existing-home transactions, up from 15% in August and 15% one year earlier, while distressed sales remained only 2% of transactions.
What Happened
Investor participation increased sharply in September—but distressed inventory did not.
The National Association of REALTORS® reported that individual investors and second-home buyers accounted for 20% of existing-home transactions, up from 15% in August and 15% one year earlier. Cash purchases represented 27% of transactions, while distressed sales remained just 2%.
The broader resale market offered more choice but slower movement. Total inventory reached 1.60 million homes, 4.6% above September 2025. Months of supply increased to 4.8 from 4.5 one year earlier, and median market time moved to 33 days from 31 in August.
Existing-home sales rose 1.5% from August to a 3.99 million annual pace, but they remained 2.2% below the prior year. The median price was $417,500, up 1.3% year over year.
Why Real Estate Investors Should Care
The data challenge two easy narratives.
First, increased investor activity does not mean a national wave of distressed inventory has arrived. The 20% transaction share also includes second-home buyers, and distressed sales remained at 2%.
Second, rising inventory does not automatically guarantee a bargain. It creates negotiating leverage, but it also signals a more competitive resale environment. A flipper can negotiate a better entry and still lose the benefit through a longer hold or seller concession at exit.
ATTOM’s Q2 flip report provides the margin context. The typical gross flip return fell to 21.5% before expenses from 25.7% one quarter earlier and 27.6% one year earlier. Typical gross profit declined to $60,526. Because those figures exclude rehab, financing and carrying costs, the spendable profit can be much smaller.
What It Changes in a Deal
Acquisition underwriting should separate three questions:
- Is the seller actually motivated?
- Is the purchase price discounted relative to a defensible after-repair value?
- Can the deal survive exit friction?
For today’s market, exit friction should include at least one additional holding period and a resale concession or price adjustment. If those two inputs erase the target profit, the acquisition basis is too high.
Illustrative Example
Illustrative example — not an actual property or investment recommendation.
Assume a flip purchased for $250,000 with a $60,000 rehab and a $425,000 expected resale. The investor borrows $225,000 at 12% interest-only, pays 2% purchase closing costs, incurs $1,000 per month in non-interest carrying costs and pays 6% to sell.
The base case assumes a six-month project. The stress case assumes the resale requires a 2% concession and one additional month.
Before vs. After
In the base case, financing and holding costs total $19,500. The property sells for $425,000, producing $65,000 of modeled profit and a 59.36% cash ROI on $109,500 invested.
In the stressed case, the effective resale falls to $416,500 and total financing/holding costs rise to $22,750. Modeled profit falls to $53,760 and cash ROI to 47.68%.
The combined impact is $11,240 less profit.
To preserve a $40,000 target profit, the calculated maximum allowable offer falls from approximately $273,277 to $262,705—a $10,572 reduction.
Risks and What Could Invalidate the Thesis
- NAR’s confidence-index figures are survey-based and do not capture every transaction.
- The 20% category combines individual investors and second-home buyers.
- Transaction share can rise even if the absolute number of investor purchases does not.
- Distressed sales are a national average; local foreclosure and probate opportunities can differ materially.
- National inventory and price data do not replace local comparable sales.
- The illustrative concession and extra month are stress assumptions, not forecasts.
- Rehab delays, permitting, change orders or insurance costs could produce a larger loss.
- A highly liquid local market could produce a faster or higher exit than modeled.
- ATTOM gross-profit figures exclude project expenses and therefore are not equivalent to net profit.
What This Means for Your Deal
Do not build the acquisition strategy around a foreclosure wave that national transaction data do not show.
Instead, search for seller motivation in:
- Stale listings
- Repeated price reductions
- Deferred-maintenance properties
- Probate or inherited homes
- Landlord exits
- Failed listings and canceled contracts
Then protect the exit with a simple rule:
Stress every flip with one extra month and a 2% resale concession before finalizing the offer.
Recalculate:
- Financing and holding costs
- Net profit
- Cash ROI
- Break-even resale price
- Maximum allowable offer
If the stressed MAO is materially below the seller’s price, the negotiation—not the optimistic ARV—is what must fix the deal.
Run Your Own Numbers
Use your actual purchase price, rehab budget, financing terms, expected resale and timeline.
CALCULATE YOUR FLIP: https://app.flipcalculatorpro.ai/house-flip-calculator
Sources
- National Association of REALTORS®, October 13, 2026: https://www.nar.realtor/newsroom/existing-home-sales-increased-1-5-in-september-according-to-nar-report
- NAR REALTORS® Confidence Index, October 13, 2026: https://www.nar.realtor/research-and-statistics/research-reports/realtors-confidence-index
- ATTOM Q2 2026 Home Flipping Report, October 1, 2026: https://www.attomdata.com/news/market-trends/flipping/home-flipping-profits-continue-gradual-two-year-decline/
- FlipCalculatorPro methodology: https://app.flipcalculatorpro.ai/methodology
Published 2026-10-15. Content by FlipCalculatorPro.