The built-to-rent (BTR) market is plagued by demand uncertainty, regional supply imbalances and the often-required choice between gaining market share or protecting margins. Remind anyone of any other part of the residential construction industry? The market rate for new home sales, for example?
AMHleading land developer BTR with more than 60,000 homes in its portfolio, places itself at the crossroads of these pressures. During the company’s Q4 2025 earnings call held on Friday, executives pointed out that the supply-demand imbalance is slowing rental growth and occupancy rates.
Demand has shifted, and the supply of new rental housing is now outstripping it in the Sun Belt’s fastest-growing markets.
The AMH team responded to these challenges by scaling back on new construction, developing strategies to sell underperforming assets, and prioritizing high occupancy to offset rental prices.
Despite these difficult market changes, AMH still had an impressive performance in 2025. The builder posted a 4.3% year-over-year increase in single-family property income, and core funds from operations (Core FFO) increased 5.4% year-over-year.
The gap in purchasing demand is creating challenges for BTR
As a peer in the resale market, BTR Builders is working on dozens of new homes in the high-growth markets of the Sun Belt and Mountain West.
“The challenge in the current environment is that supply in all aspects of residential housing, different types of housing, seems to be forced up. We see that in multifamily. We see that on the sales side, with sales for sale to change the rent and then some of the BTR that sticks to other markets,” said Lincoln Palmer, CEO of AMH.
Executives identified Sun Belt metros such as Phoenix, Las Vegas and San Antonio as markets with excess BTR purchases, while the Midwest is underfunded. Meanwhile, Seattle and Salt Lake City — also markets with depressed markets — have their own set of geographic and regulatory challenges, Palmer said.
There is good news for homebuilders on the supply front, however. Housing starts fell 7% last year, and the decline in new construction was most pronounced in Sun Belt markets. Palmer said that, even if 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 normal levels of demand and supply.
AMH prioritizes increased occupancy
At the national level, this disparity in service provision is putting pressure on AMH’s occupancy rate, which stood at 95.0% in Q4, down 400 points year-on-year. In accordance with The Yardi MatrixThe occupancy rate for the BTR sector in November was almost the same at 94.9%.
“On the demand side, we still see a strong demand for AMH products. Traffic this year is within normal year-to-year fluctuations. But again, compared to the background of high supply levels, it seems that our prospects have a lot of choice in the marketplace. And that leads to some extended lease periods,” explained Palmer.
For the first half of 2026, AMH management is prioritizing rising occupancy rates, ideally to 96.0% or higher. Generally, renewal strategies are more profitable and more effective than the cost of pursuing a new lease.
In January, for example, new leases fell 1.0%, as deals were needed to get tenants to bite. However, renewal rent growth increased by 3.5%.
Management said Q4 was challenging for accommodation due to consistent demand. Taking a break in November ended up being too short. In response, AMH adjusted its pricing strategy, which pushed new hire rates down for the year.
“From year to year, we are very focused on the type of accommodation throughout the lease period, which is supported by some price action, and then we expect a lower type of higher value for those people and we hold more after a year,” said Palmer.
About 30% of AMH tenants who do not renew their rentals do so because they become homeowners. During the call, an analyst asked whether strong approvals, including price buying, from homebuilders had impacted AMH’s performance.
In response, Palmer explained that incentives for homebuilders have hit the margins, especially in Florida, where incentives remain high. According to Palmer, however, there has not been a significant increase in tenants leaving homebuilder agreements.
Regression in development and growth conditions
In response to regional supply imbalances, AMH has scaled back new construction plans. Last year, the builder launched 2,300 homes, but management expects to deliver around 1,900 new homes by 2026.
At the same time, the builder sold 646 homes last quarter, which is more than 490 deliveries per quarter.
Earlier in its business career, AMH purchased a significant number of properties through Multiple Listing Services (MLS), but the company successfully discontinued this practice a few years ago. Instead, AMH is now focusing on building its inventory and selling underperforming assets when it makes strategic sense. In principle, houses are not sold while there is an active tenant; they are sold only when the lease expires and the unit is vacant. This limits the number of houses that can be sold in one year.
Many cases arise from access to housing acquired by AMH through consolidation. Many of those properties may be of lower quality than AMH’s overall portfolio, or may not fit strategically with the company’s vision or preferred locations.
“The typical asset that we dispose of, that we sell, is not really that important. In many cases, maybe it’s not the location that we want, or there are other factors that just make it have a different growth profile than other assets,” said CEO Bryan Smith. Selling these underperforming assets, CFO Chris Lau said, provides a boost to the rest of AMH’s portfolio. These conditions largely provide the necessary funds for the AMH development pipeline.
“We have also entered the year 2026, estimating part of the balance of the capital expenditure for development to be financed from this year’s revenue,” explained Lau.
Finding ways to reduce costs through efficiency
On the earnings call, management highlighted two key areas of the balance sheet to cut costs. Lau explained that 2025 was one of AMH’s lowest property tax growth years in the company’s history, growing at 2.5% compared to a normal growth rate of more than 3.0%. Some of this is due to price pressures and market factors, but that is not the only reason.
“One of the things that drove our property tax growth of 2.5% last year was that it was actually one of our best years ever for appeal results,” Lau said.
AMH is also flat, or perhaps slightly lower, in its construction costs in 2025 compared to 2024, Lau said. AMH has reduced its construction costs with a scaled, in-house built-to-hire model that eliminates third-party fees, with an emphasis on efficient, understated design.
Course preparation
AMH performance tracks broad trends in the BTR market. According to the latest Arbor Realty Trust’s Single-Family Rental Investment Trends Report, BTR rental growth increased during the COVID crisis, but declined more rapidly in 2022 and 2023, reflecting pricing trends in the real estate market.
National rent growth was 3.3% between October 2024 and October 2025, the report shows, and new homes started to sink sharply last year as builders faced a glut of inventory and pent-up demand.
AMH is responding to the current situation by reducing startups, disposing of underperforming assets and prioritizing staying on top of value. This strategy is at least partially influenced by AMH’s strong recruitment performance through lease renewals rather than new leases.
For some builders in the BTR category, the choice is often clearly defined – either to prioritize an initial pricing strategy that emphasizes high occupancy in exchange for high space or lost market share, or to pursue an initial occupancy strategy based on price agreements.
