Lawler: Invitation Homes Net Seller of Single-Family Properties for Second Straight Quarter

Some Operating Statistics from Large Publicly-Traded Home Builders

Housing economist Tom Lawler brings us some interesting data from Invitation Homes and also from several public builders:

Invitation Homes Net Seller of SF Properties for Second Straight Quarter; Rent Growth Slows but Remains Elevated

Invitation Homes, the largest publicly-traded holder of single-family properties, reported that it disposed of slightly more single-family properties than it acquired last quarter, and that most of the small number of properties it acquired last quarter were from “builder partners.”  According to its press release, Invitation Homes (including its joint ventures) acquired 197 SF properties in the quarter ended 3/31/2023 (of which 151 were from builder partners), and disposed of 297 SF properties.  By comparison, in the previous quarter the company (including JVs) acquired 166 properties (81 from builder partners) and disposed of 199 SF properties.  As a result, the company’s total SF rental property holdings declined for the second straight quarter last quarter.  Here is a table showing acquisitions, dispositions, and total SF properties held by Invitation Homes (including joint ventures).

The company also reported that its net contracts to buy SF properties from builder partners totaled only 14 last quarter, compared to 11 the previous quarter and 286 in the comparable quarter of 2022.

On the rent side, the company reported that rent growth has slowed but remained relatively elevated by historical standards last quarter.  On the next page is a table showing various rent growth statistics on the company’s “same store” SF portfolio.  Below is the company’s definition of “same-store” properties, as well as the definition of “rental rent growth.”

“Same Store or Same Store portfolio includes, for a given reporting period, wholly owned homes that have been stabilized and seasoned, excluding homes that have been sold, homes that have been identified for sale to an owner occupant and have become vacant, homes that have been deemed inoperable or significantly impaired by casualty loss events or force majeure, homes acquired in portfolio transactions that are deemed not to have undergone renovations of sufficiently similar quality and characteristics as the existing Invitation Homes Same Store portfolio, and homes in markets that the Company has announced an intent to exit where the Company no longer operates a significant number of homes.”

“Rental rate growth for any home represents the percentage difference between the monthly rent from an expiring lease and the monthly rent from the next lease, and, in each case, reflects the impact of any amortized non-service rent concessions and amortized contractual rent increases. Leases are either renewal leases, where the Company's current resident chooses to stay for a subsequent lease term, or a new lease, where the Company's previous resident moves out and a new resident signs a lease to occupy the same home.”

As the table shows, the trend in rental growth at the company has slowed from the torrid pace of late 2021 through much of last year, but rent growth at the company has not slowed by as much as has various apartment rent indexes, and the YOY growth rate in average monthly rent (i.e., what the average renter sees) was still at a historically high level.

Some Operating Statistics from Large Publicly-Traded Home Builders

Below is a table showing net home orders and cancellation rates from eight large publicly-traded builders.

Note that while cancellation rates last quarter were above year-ago levels, they fell sharply from the last quarter of 2022.

It is also worth noting that the combined order backlog for these eight builders on 3/31/2023 was down 39.4% from a year earlier.