Rising costs and low demand are impacting the fix-and-flip market

“Flippers are facing weaker sales conditions amid economic uncertainty, rising inventories and persistently high mortgage rates,” the report said.

As a result, the report found that only 26% of flippers reported good sales in the third quarter of 2025, compared to the seasonal norm, which is down from 34% a year ago.

Fix-and-flip prices fell 3.7% year-over-year in the third quarter, while the share of homes sold below expected value after repair rose to 21%, the highest rate since late 2022. Flippers are cutting prices faster than other sellers to avoid high holding costs.

At the same time, renovation costs reached a record high of $80,000, compared to $76,000 in the previous quarter. These costs now amount to approximately 16% of the average sales price.

“Expensive renovation work is concentrated in more expensive coastal markets, where these costs can be passed on to buyers,” the report said.

The maximum share of a home’s after-repair value that flippers are willing to pay has fallen to 64% nationally – the lowest figure since mid-2023 and a signal of lower confidence in home price growth in the near term. That figure fell from 66% in the second quarter of 2025 and 69% in the third quarter of 2024.

Regional results varied widely. The price environment weakened most in the Northwest, Florida and Texas, where more than half of respondents reported lower home prices than a year ago. In contrast, Midwest and Northeast flippers experienced more stable conditions amid tighter supply.

Flippers in Texas and Florida also reported the least competition for new deals, with about a quarter saying it has become easier to find properties as inventory rises. Nationally, 19% of respondents said they are experiencing less competition than usual in deals – the highest percentage since late 2022.

Financing has become more expensive and harder to obtain. Only 48% of flippers took out new loans in the third quarter, down from 54% in the previous period, and those that did reportedly paid an average interest rate of 9.8%.

Investors were responsible for a growing share of flipped-home buyers, which represented 28% of purchases, up from 16% a year earlier. Many are taking advantage of discounts in oversupplied markets, the report explains.

However, some flippers expressed optimism for the coming months, as 31% percent expect stronger sales in the next six months. But that share remains below last year’s level.