Invitation Homes INVH is slated to report first-quarter 2025 results on April 30, after market close. The company’s quarterly results are likely to display a year-over-year increase in revenues and no change in funds from operations (FFO) per share.

In the last reported quarter, this residential real estate investment trust (REIT) posted a core FFO per share of 47 cents, meeting the Zacks Consensus Estimate. Results reflected higher same-store net operating income (NOI) and same-store blended rent. However, lower occupancy marred the performance to an extent.

Over the preceding four quarters, INVH’s core FFO per share met the Zacks Consensus Estimate twice and surpassed it in the other two periods, with the average beat being 1.09%. The graph below depicts this surprising history:

Invitation Home Price and EPS SurpriseInvitation Home Price and EPS Surprise

Invitation Home price-eps-surprise | Invitation Home Quote

In this article, we will dive deep into the U.S. apartment market environment and the company's fundamentals and analyze the factors that may have contributed to its first-quarter 2025 performance.

US Apartment Market in Q1

The first quarter of 2025 brought a wave of strong apartment demand, offering a lift to occupancy and rent growth as the supply surge begins to wane. Per RealPage data, from January through March 2025, more than 138,000 market-rate apartment units were absorbed nationally. This marks the highest first-quarter demand on record in the RealPage data set covering more than three decades. Combined with the robust demand seen over the last three quarters of 2024, annual absorption reached nearly 708,000 units, essentially matching the absorption from the early 2022 demand boom.

Demand in the year-ending first quarter of 2025 exceeded concurrent supply. Though nearly 577,000 units were delivered in the said period —just shy of last quarter’s record high of about 589,000 units —annual supply volume is forecasted to decline in the coming months, indicating that the construction cycle may have peaked.

Occupancy rose modestly to 95.2% in March, the highest reading since October 2022. While still within long-term norms, the uptick provides confidence that the rental market is not materially oversupplied. Rent growth has also regained traction. Effective rents rose 0.75% in March and 1.1% in the year-ending March 2025 —the highest 12-month reading since June 2023. All of the nation’s 50 largest apartment markets recorded rent increases on a monthly basis, signaling broad-based strength. The average effective rent was $1,848.

Story Continues

However, the recovery is regionally uneven. The Midwest and Rust Belt regions led annual rent gains, with cities like Kansas City, MO; Chicago, IL; and Pittsburgh, PA, outperforming. In contrast, high-supply Sun Belt metros, such as Austin and Phoenix, continued to experience rent cuts. However, these markets saw monthly rent growth in March, suggesting momentum is returning ahead of the prime leasing season.

Factors at Play for Invitation Homes

Amid this surge in demand, INVH’s quarterly performance is likely to have benefited from a high-quality portfolio of single-family rental units in infill locations in the Western United States, Sunbelt and Florida. Solid demand for such rental units in the high-growth markets with favorable demographic trends might have aided the company’s first-quarter earnings.

Moreover, the company aims to drive profitability with the value-added platform and minimal capital investment. The high margin and growing third-party management business might have positively contributed to its first-quarter revenues.

However, the high supply of rental properties in some markets may have an adverse impact. High interest expenses might have also acted as a deterrent.

Projections for INVH

For the first quarter, the Zacks Consensus Estimate for INVH’s rental revenues currently stands at $647 million, implying growth of 13.2% from the prior-year period’s reported figure. The Zacks Consensus Estimate for first-quarter total revenues is pegged at $669.4 million, indicating a rise of 3.6% from the year-ago reported number.

Invitation Homes’ activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share was lowered by 1 cent to 47 cents over the past two months. However, the figure suggests no change year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

What Our Quantitative Model Predicts for Invitation Homes

Our proven model does not conclusively predict a surprise in terms of FFO per share for INVH this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

Invitation Homes currently has an Earnings ESP of -0.30% and carries a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the residential REIT sector — Equity Residential EQR and Camden Property Trust CPT — that you may also want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Equity Residential, scheduled to report quarterly numbers on April 29, has an Earnings ESP of +0.26% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Camden Property Trust, slated to release quarterly numbers on May 1, has an Earnings ESP of +1.69% and a Zacks Rank #3 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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Equity Residential (EQR):Free Stock Analysis Report

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Invitation Home (INVH):Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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