American Homes 4 Rent and Invitation Homes are two big real estate investment trusts poised to benefit from the trend, say analysts at Mizuho Securities USA and Raymond James & Associates.
LOS ANGELES — Rental homes will remain an attractive option next year to would-be homebuyers sidelined by high mortgage rates and rising home prices, analysts say.
It starts with mortgage rates. While the average rate on a 30-year mortgage fell to a two-year low of 6.08% in late September, it’s been mostly rising since then, echoing moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans. Analysts at Mizuho also expect that homeownership affordability hurdles will maintain “a supportive backdrop” and stoke demand for rental houses, helping American Homes 4 Rent and Invitation Homes to maintain their tenant retention rates.
While individual homeowners and mom-and-pop investors still account for the vast majority of single-family rental homes, homebuilders have stepped up construction of new houses planned for rental communities.In the third quarter, builders broke ground on about 24,000 single-family homes slated to become rentals. That’s up from 17,000 a year earlier.
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