Wall Street sees a major rebound brewing in rental housing stocks
Investing.com -- Raymond James has upgraded ratings on leading single-family rental REITs American Homes 4 Rent and Invitation Homes, citing renewed optimism around proposed U.S. housing legislation and improving rental market fundamentals.
Raymond James analysts raised both companies to “Outperform” after revisions to the proposed “21st Century ROAD to Housing Act” removed several provisions viewed as harmful to institutional single-family rental operators. The brokerage upgraded American Homes 4 Rent with a new target price of $35, while Invitation Homes received a $32 target price.
The revised House bill reportedly eliminates a controversial requirement that would have forced institutional landlords to sell newly acquired built-for-rent homes after seven years, regardless of tenant occupancy. The updated legislation also allows large investors to continue purchasing rental inventory from homebuilders and from each other, preserving opportunities for consolidation and portfolio growth within the sector.
Analysts said the changes could significantly reduce regulatory uncertainty hanging over the industry. Raymond James added that bipartisan support for the revised bill appears to be growing, with a House vote expected soon.
Beyond policy developments, Raymond James pointed to strengthening demand for single-family rentals as elevated mortgage rates continue to keep many households priced out of homeownership. The report noted that leasing activity improved during the latter half of the first quarter of 2026 and accelerated further in April, with both companies reporting rising occupancy and positive new lease growth trends.
The report estimated that renting an entry-level single-family home in the U.S. currently costs roughly $1,000 less per month than owning one, reinforcing demand for rental housing.
Raymond James also highlighted aggressive share repurchase programs by both REITs. Since late 2025, the companies have collectively bought back more than $850 million in stock, taking advantage of what analysts described as steep discounts to net asset value in public markets.
Supply pressures in the built-for-rent market may also be easing. According to the report, built-for-rent housing starts declined 33% from peak levels, suggesting that excess new supply could moderate through 2026.
Raymond James maintained that both companies remain positioned to benefit from long-term housing affordability challenges, with institutional single-family rentals increasingly serving as an alternative for families unable to purchase homes in a high-rate environment.