Some investors are dropping out of this year's resurgent housing market due to rising home prices and an increased competition for housing in many parts of the nation.
The investor share of home purchases tumbled from 22% in April to 20.2% in May, based on a three-month moving average, according to the Campbell/Inside Mortgage Finance HousingPulse tracking survey.
Similarly, rising interest rates and growing home prices are pushing investors to grow weary and are beginning to back away from the market.
Meanwhile, both current homeowners and first-time homebuyers increased their participation in the home purchase market month-over-month.
For instance, current homeowners accounted for 43.8% of home purchases in May, while first-time homebuyers represented 36% in May, HousingPulse noted.
In recent years, investor home purchase activity has been concentrated among foreclosed properties and short sales, since these property types offer discounted pricing and provide more profitable opportunities such as flipping or renting.
However in May, investor purchases of both real estate-owned properties and short sales has fallen significantly due to profit margins being squeezed by rising prices, reducing incentives for investors to buy.
The drop in investor interest in both the REO and short sales sectors has correlated with a drop in the sales-to-list price ratios for these properties, HousingPulse results show.