Editorial|&utm_term=|Website-Editorial-NAT(Website)|"> Auction.com reports. The firm has released its November Auction.com Real Estate Nowcast, which targets the number of homes expected to be sold this month at 5.25, a prediction that suggests sales will be essentially flat compared with October's 5.26 million sales figure, which was released Nov. 20 by the National Association of Realtors.

According to Rick Sharga, EVP of Auction.com, “The housing market, while not growing rapidly, is at least maintaining its current momentum rather than taking a step backwards. It's encouraging to see sales activity hold steady, or improve even marginally, considering all the headwinds the market is facing: tight credit, low inventory, less investor activity and relatively weak demand.”

The firm's analysis suggests that although investor purchasers still play an important role in the market, their activity is down compared to earlier in the housing recovery. According to NAR, the percentage of all-cash sales, which tends to be primarily investors, increased to 27% of total sales in October, up from 24% in the previous month, but off the 31% level seen a year ago. Sharga notes that Auction.com is continuing to see strong interest from real estate investors at its auctions, but that there have been noticeable changes in this market segment. “We've seen buying activity slowing down among the largest institutional investors, and some of this activity replaced by mid-sized companies and individuals looking to buy and rent out single-family homes. The asset class seems likely to continue to grow, but the share of inventory purchased by the largest funds appears to be shrinking.”

As GlobeSt.com reported earlier this month, sales to institutional investors—entities that purchase at least 10 properties in a calendar year—accounted for 4.3% of all sales of single-family homes and condos in the third quarter of the year, representing the lowest level since the fourth quarter of 2010, according to a report from RealtyTrac. The figure is down from 5% in the previous quarter and down from 5.3% a year ago, the firm reports.

According to Daren Blomquist, VP of RealtyTrac, “Institutional investors are still actively purchasing single-family rentals, but continue t gravitate toward markets where lower-end inventory is still available. Meanwhile, there has been a recent surge in cash buyers in some markets, often coinciding with either a rebound in distressed sales attracting bargain-hunting cash buyers or a booming job market engendering a competitive bidding environment where cash is king.”

Blomquist added that he expects cash sales to continue to be a significant part of the real estate puzzle, and he told us, “We do expect the cash share of sales to continue to decrease, but not too much before it plateaus at a historically normal level. The 33.9% of cash sales in the third quarter was actually not too far above the historic norm of 33.4 percent going back to 2001. I think it may surprise many that the historic norm is one in every three sales of residential properties is a cash sale, but cash has always had a significant role in the real estate market and will continue to do so.”

Also affecting the housing landscape is the limited number of new buyers entering the market. First-time home buying has remained constrained, accounting for just 29% of total sales in October and staying below 30% for 18 of the past 19 months, with this range being the lowest in nearly three decades, according to a NAR study.

“Less than six months' inventory—and very little at the entry level of the market—coupled with tight credit make it extremely challenging for new buyers,” says Sharga. “And neither situation is likely to improve soon.” Inventory levels typically decline in winter months, and a recent survey conducted by Collingwood Group concluded that 71% of lenders are unlikely to loosen credit standards.