Amh Posts Revenue Gains Despite Overbuild And Vacancy Hurdles

The built-to-rent (BTR) homebuilding market is plagued by demand uncertainty, regional supply imbalances and an often-necessary choice between gaining market share or protecting margins. Remind anyone of any other segment of the residential construction sector? Market-rate for-sale new homes, for example?

AMH, the nation’s premier BTR builder with more than 60,000 homes in its portfolio, positions itself in the crosshairs of these pressures. During the company’s Q4 2025 earnings call held on Friday, executives revealed that supply-demand imbalances dampened rent growth and occupancy rates.

Demand has softened, and new rental home supply now exceeds it in high-growth Sun Belt markets. 

The AMH team has responded to these challenges by scaling back on new construction, strategically selling underperforming assets, and prioritizing high occupancy in exchange for rent price leverage. 

Despite these difficult market dynamics, AMH still had a commendable performance in 2025. The builder posted a 4.3% year-over-year increase in single-family property revenues, and core funds from operations (Core FFO) shot up 5.4% annually. 

Supply-demand gap poses challenges for BTR

Like peers in the for-sale market, BTR builders are working through a glut of new homes in high-growth Sun Belt and Mountain West markets. 

“The challenge in the current environment is that supply across all aspects of residential, different housing types, seems to be stubbornly elevated. We see that in multifamily. We see that on the for-sale side, with some of the for-sale to for-rent conversions and then some BTR that’s sticky in some of the markets,” Lincoln Palmer, AMH Chief Operating Officer, said. 

Executives pointed to Sun Belt metros such as Phoenix, Las Vegas and San Antonio as markets with an oversupply of BTR inventory, whereas the Midwest has an undersupply. Meanwhile, Seattle and Salt Lake City – also supply-constrained markets – have their own set of geography- and local-regulation-related challenges, Palmer said. 

There is some positive news for homebuilders on the supply front, though. Housing starts fell 7% last year, and the slowdown in new construction was most prominent in Sun Belt markets. Palmer argued, however, that even though builders have worked through some of the excess supply in those markets, it will take “some time to work through the inventory” and return to a normalized supply-demand balance. 

AMH prioritizes an increase in occupancy

At the national level, this supply imbalance put pressure on AMH’s occupancy rate, which stood at 95.0% in Q4, down 400 basis points year-over-year. According to Yardi Matrix, the average occupancy for the BTR sector in November was almost identical at 94.9%. 

“On the demand side, we’re still seeing great demand for AMH products. Traffic this year is within normal year-over-year fluctuations. But again, set against that backdrop of higher supply levels, it just seems like our prospects have more choice in the marketplace. And that’s leading to some slightly extended lease-up times,” Palmer explained. 

For the first half of 2026, AMH executives are prioritizing increasing occupancy rates, ideally to 96.0% or higher. Typically, renewal strategies are more profitable and more effective than the costs of pursuing new leases. 

In January, for example, rents for new leases fell 1.0%, as concessions were necessary to get tenants to bite. However, renewal rent growth ticked up 3.5%. 

Executives say Q4 was challenging on the occupancy front due to inconsistent demand. A brief pickup in November ultimately ran short on momentum. In response, AMH adjusted its pricing strategy, which pushed new lease rental rates negative for the year. 

“Starting the year, we’re highly focused on kind of building occupancy throughout the leasing season, supported by some price action, and then expect a flatter kind of peak of that occupancy and then holding more into the back of the year,” Palmer said. 

About 30% of AMH tenants who do not renew their leases do so because they become homeowners. During the call, an analyst asked whether aggressive concessions, including rate buydowns, from homebuilders impacted AMH’s occupancy. 

In response, Palmer explained that the homebuilder incentives affected them on the fringes, particularly in Florida, where incentives remain elevated. According to Palmer, however, there hasn’t yet been a noteworthy increase in tenants leaving for homebuilder concessions. 

Pulling back on development and increasing dispositions

In response to regional supply imbalances, AMH scaled back plans for new construction. Last year, the builder delivered 2,300 homes, but executives expect to deliver about 1,900 new housing units in 2026. 

At the same time, the builder sold 646 homes last quarter, which outnumbered the 490 quarterly deliveries. 

Earlier in its business trajectory, AMH bought a significant number of homes through the Multiple Listing Services (MLS), but the company has effectively discontinued this practice over the last few years.  Rather, AMH now focuses on building its own inventory and selling off underperforming assets when it makes strategic sense. By policy, homes are never sold while there is an active tenant; they are sold only when a lease expires and the unit is vacant. This limits the number of homes that can be sold in a single year. 

Many of the dispositions come from gaining access to homes that AMH acquired through consolidation. Many of those properties may be lower quality than AMH’s overall portfolio, or may not strategically align with the company’s vision or preferred locations. 

“The typical property that we’re disposing of, that we’re selling, really is a non-core asset. In many cases, it’s maybe not the location that we want, or there are other characteristics that just make it have a different growth profile from the rest of the assets,” CEO Bryan Smith said.  Selling off these underperforming assets, CFO Chris Lau said, gives a boost to the rest of the AMH portfolio. These dispositions largely provide the necessary financing for AMH’s development pipeline. 

“We pivoted further heading into 2026, sizing the on-balance sheet portion of development capital deployment to essentially be match-funded with disposition proceeds for this year,” Lau explained. 

Finding cost-cutting measures through operational efficiency 

On the earnings call, executives highlighted two main areas of the balance sheet for cost-cutting. Lau explained that 2025 was one of AMH’s lowest property tax growth years in company history, growing 2.5% compared to a typical growth rate of over 3.0%. Some of this is because of price pressures and market factors, but that isn’t the only reason. 

“One of the things that drove our property tax growth of 2.5% last year is that it was actually one of our best years ever in terms of appealed outcomes,” Lau said. 

AMH also flattened, or maybe even slightly reduced its building costs in 2025 compared to 2024, Lau said. AMH lowered its construction costs through a scaled, in-house build-to-rent model that removes third-party fees, with an emphasis on efficient, no-frills design.

Course correction

AMH’s performance tracks with broader trends in the BTR market. According to Arbor Realty Trust’s latest Single-Family Rental Investment Trends Report, BTR rental growth spiked during the COVID pandemic, but decelerated quite rapidly in 2022 and 2023, mirroring price trends in the for-sale market. 

Rent growth nationally was 3.3% between October 2024 and October 2025, the report shows, and new housing starts dipped substantially last year as builders faced an excess of inventory and lagging demand. 

AMH is responding to the current environment by scaling back on starts, disposing of underperforming assets and prioritizing occupancy over price. This strategy is at least partially influenced by AMH’s stronger rental performance with lease renewals than with new leases. 

For other builders in the BTR segment, the choice is often clear-cut – either prioritize a price-first strategy that emphasizes higher rents in exchange for higher vacancy or lost market share, or pursue an occupancy-first strategy based on price concessions.