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RBC Capital Markets downgraded Invitation Homes (NYSE:INVH) stock to Sector Perform from Outperform on Monday as the REIT’s July-to-August business update showed further deceleration in leasing spreads.
Its July-August blended lease rate growth was 3.7%, down from the May peak of 5.4%. “This represents the lowest spread since January, at a time when demand and spreads should be higher,” analyst Brad Heffern wrote in a note to clients.
And with mortgage rates gradually moving down, though still elevated, “for-sale housing could potentially become a headwind,” he added, as tenants “might just be waiting for the right time” to buy a home.
“This may be a gradual headwind, but we do think it will bias occupancy downward in 2025, and the price elasticity of demand for people moving out to buy a home is effectively zero,” the note said.
RBC’s Sector Perform rate aligns with the SA Quant system rating of Hold and clashes with the average sell-side analyst rating of Buy.
(INVH) slipped 0.6% in afternoon trading.
