Lessors of Residential Buildings NAICS 531110

Jul 20, 2026 - New Housing Law Limits Institutional Investors

• According to The Wall Street Journal, the new 21st Century ROAD to Housing Act limits the extent to which institutional investors can expand their single-family home portfolios. The law bars investors who already own more than 350 single-family homes from buying additional existing homes, while allowing them to continue investing in build-to-rent developments and certain renovation projects. The goal is to steer institutional investment toward creating new housing rather than competing with homebuyers for existing homes. However, investors remain cautious because of political uncertainty, modest returns, and limited resale options for build-to-rent properties. Some institutional landlords have already increased home sales and are reassessing their portfolios. If investment in rental housing slows, fewer new rental communities could be built, tightening supply and putting upward pressure on rents despite the law's goal of improving housing affordability.
• Apartment demand remained strong in the second quarter despite slower job growth, reduced immigration, and moderate population growth, according to Bisnow. Cushman & Wakefield reported national multifamily net absorption reached 124,600 units, the fifth-highest quarterly total in nearly 25 years, while vacancy fell to 8.9%. Trailing four-quarter absorption also exceeded new apartment deliveries for the first time since early 2022, signaling a tighter market. Even so, Realtor.com reported the national median asking rent in June declined 1.5% from a year earlier, and remained about 4% below its 2022 peak. Permitting for new multifamily construction also slowed in several major markets. If construction activity remains subdued, the recent supply surge that helped moderate rents could fade, potentially putting upward pressure on future apartment rents.

• In the first quarter of 2026, there were about 14,000 single-family built-for-rent (SFBFR) housing starts in the US, down about 26% from the 19,000 that were started during the same period in 2005, according to the National Association of Home Builders' analysis of US Census Bureau data. During the four most recent quarters, 62,000 SFBFR homes were under construction, down 26% from the previous four-quarter period. However, while the historical four-quarter moving average market share for SFBFR is about 2.7% (1992-2012), SFBFR’s current share of the overall single-family market is just under 7%. In Q1 2026, the SFBFR market was challenged by high financing costs and an increase in multifamily supply. Developer activity was also chilled by a Senate version of a housing bill that would have required institutional investors to sell SFBFR homes to individual buyers within seven years. A House version of the housing bill removed the SFBFR provision. SFBFR homes provide an alternative for consumers who want more space but are challenged by a lack of affordable housing inventory and downpayment requirements in the for-sale market.
• A recent $69 billion merger announcement by AvalonBay Communities and Equity Residential could signal a fresh round of industry consolidation, as large landlords seek safety in numbers amid weak rent growth and profits, according to The Wall Street Journal. The move would create the nation’s largest apartment owner, and comes as apartment landlords face sluggish rent growth, softer profits, rising costs, elevated interest rates, and investor pressure. For the apartment industry, the deal signals that more owners may pursue mergers, acquisitions, and cost-cutting measures to improve efficiency, lower financing costs, and strengthen competitiveness as rent growth remains constrained by a large pipeline of new apartment supply, particularly in the Sun Belt and Mountain West. Analysts expect consolidation to continue even though the combined company is unlikely to gain significant pricing power.