SFR giant Invitation Homes starts lending to homebuilders

Invitation Homes is stepping into the lending business, loaning $32.7 million to a Texas developer for a Houston housing project. 

The single-family rental giant said the loan to the unnamed builder will support 156 homes, and it will have the option to purchase the project. The publicly traded company, which owns or manages over 110,000 properties nationwide, said it anticipates more development lending. 

"By partnering with homebuilders to selectively finance the development of new communities that are future strategic acquisition candidates for Invitation Homes, we can help create much-needed new housing supply while achieving attractive returns," said Scott Eisen, chief investment officer at Invitation, in a press release.

The company also touted its acquisition of more than 300 new homes in high-demand markets Dallas, Denver and Nashville, from homebuilders for over $100 million. It's continuing to expand as investor activity in the housing market at-large is stabilizing, after wild swings in the recent low-rate era.

Founded in 2017, Invitation owns over 85,000 homes outright, and another 7,660 via joint ventures. It reported $166.2 million in net income in the recent first quarter, a 16.4% annual increase. 

The industry leader last September also paid the Federal Trade Commission a $48 million settlement to address allegations it overcharged tenants and improperly initiated eviction proceedings.

The inventory dynamics in today's housing market

Invitation's latest move comes amid strong demand for new homes, although housing market dynamics are making for an uncertain outlook. 

While an inventory shortage has long-plagued the housing market, that tide is shifting. At the end of April, the dollar value of the nation's growing for-sale inventory hit a record $698 billion, according to Redfin. The brokerage estimates there are 500,000 more sellers than buyers, reversing the frenzy of the pandemic-era markets.

Lofty home prices are also showing signs of receding, but mortgage rates continue to dampen affordability.

More builders in April also reported offering price cuts to entice buyers, while the construction industry was anxious over President Trump's tariff threats. Levies on steel and aluminum rose to 50% Wednesday, which could affect commercial builders more so than residential developers.