The Zacks REIT and Equity Trust – Residential industry is currently facing significant challenges from oversupply in many high-growth markets, limiting rent growth and increasing concessions. Despite strong demand, the industry, ranked #178 within the Zacks framework (bottom 28% of approximately 250 industries), reported a 9.5% decline over the past year, contrasting with the S&P 500’s 26.7% increase. The aggregate funds from operations (FFO) per share estimates for 2026 have dropped by 6.9%, and 8.6% for 2027, signaling a decrease in growth expectations.
With new construction activity beginning to slow due to high financing costs, the long-term outlook for the industry may improve. Key players such as Invitation Homes Inc. (INVH), Equity LifeStyle Properties, Inc. (ELS), and American Homes 4 Rent (AMH) are well-positioned for growth given strong occupancy rates and favorable market conditions. As of March 31, 2026, Invitation Homes managed 109,745 homes with occupancy rates rising to 97.2%. Equity LifeStyle Properties operates 453 properties across North America, benefiting from steady demand for affordable housing.
The shift towards fewer new apartment deliveries indicates a potential for restored pricing power as competition decreases. However, rental demand has normalized, urging landlords to balance occupancy with pricing strategies amid economic pressures, affecting revenue growth prospects in the near term.
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