Why Inviting Home Stock Is Falling Today

Houses of invitation (INVH -4.10%) informed investors, saying the company is “well positioned” to deliver huge annual funds from operations (AFFO) growth in the coming years. But investors seem more focused on metrics showing a slowdown from last quarter.

Shares of Invitation Homes were down about 5% as of 11:30 a.m. ET on the news.

Softer growth this quarter

Invitation Homes is a real estate investment trust (REIT) focused on single-family rental homes. The company provided an update to investors highlighting the strength of its third-party management business and its strong relationships with homebuilders, arguing that it is well set up to grow from here.

But in the short term, the trends seem to be moving in the wrong direction. Invitation Homes said quarterly renewal rental rates were rising at a rate of 4.4 percent, compared with 5.6 percent in the second quarter. Similarly, growth in the new lease rate so far this quarter is 1.9%, compared to 3.6% in the previous three months.

These numbers tend to be volatile as the year goes on, and it’s dangerous to read too much into any two-month period. But the trend for now is in the wrong direction. On a day when Wall Street is worried about the health of the consumer and the direction of the economy, the update appears to have spooked some investors.

Is Invitation Homes a buy?

For investors focused on the long term, the trends are still in Invitation’s favor. The company said that in all 16 major markets, it is more affordable to rent a home than to buy.

The stock has gone nowhere for years and is actually down 20% since the start of 2022. But with the need for more housing, especially flexible housing, in the coming years, there is ample opportunity for growth.

Investors who are able to look beyond short-term volatility could see this selloff as a buying opportunity.