Rental home investors poised to benefit as mortgage rates, high home prices sideline buyers in 2025

LOS ANGELES (AP) — Rental homes will remain an attractive option next year to would-be homebuyers sidelined by high mortgage rates and rising home prices, analysts say.

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.

Their outlooks boil down to a simple thesis: Many Americans will continue to have a difficult time finding a single-family home that they can afford to buy, which will make renting a house an attractive alternative.

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.

The yield, which has hovered around 4.4% this week, surged after the presidential election, reflecting expectations among investors that President-elect Donald Trump’s proposed economic policies may widen the federal deficit and crank up inflation.

Analysts at Raymond James and Associates say they see mortgage rates remaining “higher for longer,” given the outcome of the election. Last week, they reiterated their “Outperform” ratings on American Homes 4 Rent and Invitation Homes, noting “we are increasingly confident in the longer-term outlook for single-family rental fundamentals and the industry’s growth prospects.”

They also believe the two companies will continue to benefit from “outsized demographic demand for suburban homes," and the monthly payment gap between renting and owning a home, which they estimate can be as much as 30% less to rent.

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.

The companies are averaging higher new and renewal tenant lease rates when compared to several of the largest U.S. apartment owners, including AvalonBay, Equity Residential and Camden Property Trust, according to Mizuho. It has an “Outperform” rating on American Homes 4 Rent and a “Neutral” rating on Invitation Homes.

Shares in Invitation Homes are down 1.2% so far this year, while American Homes 4 Rent is up 4.4%. That's well below the S&P 500’s 24% gain in the same period.

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. In the second quarter, single-family rental starts climbed to 25,000, the highest quarterly total going back to at least 1990, according to an analysis of U.S. Census data by the National Association of Home Builders.

FILE - A home for sale in Sudbury, Mass., is shown on Sept. 22, 2024. (AP Photo/Peter Morgan, File)

GENEVA (AP) — More aid workers, health care staffers, delivery personnel and other humanitarians have been killed in 2024 than in any other single year, the United Nations reported Friday.

Bloodshed in the Middle East has been the single-biggest cause of the 281 deaths among humanitarians globally this year, according to the U.N. Office for the Coordination of Humanitarian Affairs.

“Before the year is even over, 2024 has become the deadliest on record for humanitarian personnel worldwide,” OCHA spokesman Jens Laerke said. He told reporters in Geneva the figure surpassed the previous record of 280 deaths for the whole of last year.

Humanitarians "are working courageously and selflessly in places like Gaza, Sudan, Lebanon, Ukraine and so on. They show the best humanity has to offer, and they are getting killed in return — in record numbers,” he said.

“These numbers will send shockwaves around the humanitarian community, especially on the front lines of the response,” he added.

The U.N. said the figures come from the Aid Worker Security Database, a U.S.-funded project run by a Britain-based group called Humanitarian Outcomes.

A total of 268 of the humanitarians killed — including from non-U.N. organizations like the Red Cross and Red Crescent — were national staff, while 13 were international staff.

Some 230 aid workers have been killed in occupied Palestinian areas, the database showed Friday. It did not break out whether that was Gaza or the West Bank.

Laerke said the threats to aid workers “extend beyond Gaza, with high levels of violence, kidnappings injuries, harassment and arbitrary detention" reported in Afghanistan, Congo, South Sudan, Sudan, Ukraine, Yemen and elsewhere.

OCHA said a total of 333 humanitarians have been killed since the latest conflict between Israel and the militant Hamas group erupted when the militants stormed into southern Israel on Oct. 7, 2023, killing some 1,200 people, mostly civilians, and abducting another 250.

The death toll in the Gaza Strip from the 13-month-old war has surpassed 44,000, local health officials said Thursday. The Gaza Health Ministry does not distinguish between civilians and combatants in its count, but it has said that more than half of the fatalities are women and children. The Israeli military says it has killed over 17,000 militants, without providing evidence.

FILE- Medics from the Palestine Red Crescent Society and volunteers at the National Disaster Response Team "NDRT" , participated in a drill during a graduation ceremony of medics, in Mughraqa, central Gaza Strip, Sept. 5, 2013. (AP Photo/Adel Hana), File)

FILE - A Red Cross vehicle carrying Israeli hostages drives by at the Gaza Strip crossing into Egypt in Rafah on Nov. 25, 2023. (AP Photo/Fatima Shbair, File)