Invitation Homes Inc. ($INVH)

Welcome to the Invitation Homes First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Scott McLaughlin, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning. Joining me today from Invitation Homes are Dallas Tanner, our President and Chief Executive Officer; Tim Lobner, our Chief Operating Officer; Jon Olsen, our Chief Financial Officer; and Scott Eisen, our Chief Investment Officer. Following our prepared remarks, we'll open the line for questions from our covering sell-side analysts. During today's call, we may reference our first quarter 2026 earnings release and supplemental information. We issued this document yesterday afternoon after the market closed, and it is available on the Investor Relations section of our website at www.invh.com. Certain statements we make during this call may include forward-looking statements relating to the future performance of our business, financial results, liquidity and capital resources and other nonhistorical statements. which are subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated. We describe some of these risks and uncertainties in our 2025 annual report on Form 10-K and other filings we make with the SEC from time to time. Except to the extent otherwise required by law, we do not update forward-looking statements and expressly disclaim any obligation to do so. We may also discuss certain non-GAAP financial measures during the call. You can find additional information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures in yesterday's earnings release. With that, I'll now turn the call over to Dallas Tanner. Go ahead, Dallas.

Thank you, Scott. Good morning, everyone. Thanks for joining us. I want to start by thanking our associates for another quarter of strong execution in a dynamic environment. and our residents for continuing to choose Invitation Homes. We delivered first quarter results in line with our expectations, accelerated average occupancy to the mid-96% range and entered April with improving leasing momentum. I'll let Tim walk through the details, but this positions us really well in the early part of the peak leasing season. We are in the business of providing high-quality, professionally managed homes in neighborhoods where families want to live. And the value proposition for our residents has never been clear. In our markets, leasing one of our homes saves residents on average almost $1,000 per month compared to owning, according to data from John Burns. That is not a temporary dislocation. It reflects higher mortgage rates, increased home prices and the structural cost of homeownership. For millions of American families, leasing a single-family home is simply the most financially responsible housing choice. We are proud to be part of that solution, and we take that responsibility seriously. In recent months, I've spent a lot of time working with other industry leaders in Washington, D.C. to advocate on behalf of our industry and our residents. I've met frequently with policymakers at the White House, Treasury and Capitol Hill on both sides of the aisle. Everyone is focused on the same objective of making housing more affordable in this country. And I'm encouraged by the constructive dialogue and confident we're moving in the right direction for our industry and the residents we serve. This responsibility shows up in everything we do. We maintain and improve almost 110,000 homes across 16 core markets. We create new housing supply through development and strategic partnerships, and we provide residents the flexibility, space and access to school districts they want without the financial burdens of homeownership. For our residents, these are intentional housing choices, not stop gaps, and that is reflected in our strong retention rates and the length of time our residents choose to stay. Those resident behaviors underpin the resilience of our business. During periods of uncertainty, we tend to see residents stay longer, occupancy to remain stable and cash flows hold up really well. In the first quarter, our same-store average resident tenure was over 40 months with resident renewals remaining very high at over 78%. That resilience gives us flexibility in how we think about allocating capital. While the share price has not been where we want it to be, we've been deliberate about addressing that. During the quarter, we completed the full $500 million share repurchase authorization approved by our Board last October, including $400 million of buybacks since our February earnings call. Our Board has also just approved a new $500 million repurchase authorization, and we will continue to evaluate the best uses of capital as conditions evolve. We also continue to support and advance our third-party homebuilder partnerships. Our forward pipeline today stands at just over $200 million, reduced roughly 2/3 from where it was a year ago. We value these relationships because they serve a dual purpose. They generate attractive risk-adjusted returns for our shareholders, and they contribute new housing supply to the markets where we operate. Meanwhile, the ResiBuilt acquisition we closed in January has moved quickly from integration to production, delivering over 300 homes to third-party buyers during the quarter. Our plan remains to continue using ResiBuilt primarily as a fee builder, as we evaluate the right pace of building for ourselves. In addition, our construction lending business has grown to $279 million of commitments as of today, generating attractive returns. To date, we funded just under $20 million against those lending commitments, and we expect that number to grow through 2026 as the development progresses. Together, ResiBuilt and Construction Lending represent a differentiated and capital-efficient way of bringing new housing supply to the markets. Looking ahead, we feel good about where we stand. Occupancy is climbing as we enter peak leasing season. New lease rent growth turned positive in April. We have a clear view of where our capital can create the most value. The thesis is really straightforward, durable demand, disciplined operations and capital allocation that rewards shareholders, we are executing all 3. At our November Investor Day, I laid out exactly what this management team is focused on. running the best operated single-family rental company in the country. I'm confident we are moving in the right direction. With that, I'll turn it over to Tim.

Thanks, Dallas, and good morning, everyone. In my prepared remarks today, I will walk through our first quarter operating results, provide some context on the year-over-year comparisons and then share our preliminary April leasing trends. But first, I want to thank our teams in the field for their continued dedication and our residents for choosing Invitation Homes. Starting with the headline numbers. Same-store core revenue grew 1.6% year-over-year. Core operating expenses grew 5.7% and same-store NOI was down 0.3%. Regarding revenue, renewal rent growth was a healthy 3.7% while new lease rent growth was negative 3.0%, resulting in a blended rent growth of 1.6%. New lease rent growth reflected elevated supply conditions that continue to weigh on pricing in a number of our markets during the quarter. The good news is that our West Coast and Midwest markets all held positive new lease rent growth. And as I will discuss in a moment, the picture improved considerably in April. Same-store occupancy averaged 96.3% for the quarter. While that's a strong result relative to historic norms, it reflects a normalization from the 97.2% occupancy we achieved in the first quarter of 2025. That 90 basis point year-over-year reduction created a comparable headwind to our same-store revenue growth this quarter. We've talked about this normalization during the last few quarters. and it has played out right where we expected and where we want to be as we head deeper into peak leasing season. Encouragingly, occupancy improved every month this year. moving from 96% at the start of the year to 97% by quarter end. Meanwhile, bad debt remained low and stable during the first quarter at 60 basis points. flat with a year ago, which speaks to the financial health of our resident base. That financial health shows up in other ways too. To date, over 160,000 residents have joined our no-cost positive credit reporting program through. with the majority improving their average credit score by nearly 50 points since enrolling. Turning now to first quarter same-store expenses. The 5.7% year-over-year growth looks elevated relative to our full year guidance. And the reason is straightforward. As you'll recall, first quarter of 2025 expenses were unusually low due to a combination of factors, including abnormally mild weather that suppressed R&M costs and exceptionally low turnover. These factors created a tough year-over-year comparison. We expect the year-over-year expense comparisons to normalize as we move through the year. and our full year expense guidance of 3% to 4% remains intact. On the broader supply picture, third-party data tracking single-family for-lease listings across our key markets reflects continued moderation to date this year. While listings are still elevated year-over-year, the level has notably improved in recent months, which is consistent with what we are beginning to see in our own leasing activity. which brings me to April, where the preliminary trends are encouraging. Average occupancy accelerated to 97.1%, up 80 basis points from first quarter. Renewal rent growth was in the low 3% range and new lease rent growth returned to positive territory at just under 0.5% or a 230 basis point acceleration from March. Together, this brought April blended rent growth to 2.3%. In summary, we came into this year knowing the first quarter comparisons would be challenging, and our teams executed well through them. Occupancy is climbing. New lease rent growth has turned positive, and the majority of peak leasing season is in front of us. We feel good about where we stand. With that, I'll turn it over to Jon.

Thanks, Tim. Today, I'll start with our earnings results and cover capital allocation, the balance sheet and guidance. For the first quarter, core FFO per share was generally flat year-over-year, and AFFO per share was down 2.6%, consistent with our expectations. As Tim noted, the first quarter of 2025 was an exceptionally strong quarter. Occupancy was at a post-pandemic high, expense growth was notably low and recurring capital expenditures came in below trend. While our performance was solid, our per share metrics this quarter reflect that difficult comparison as anticipated. Additionally, I would note that the weighted average share count used in our per share metrics for this quarter does not yet fully reflect the denominator impact of our robust share repurchase activity. Turning to capital allocation. As Dallas mentioned, we had an active quarter. We have achieved very strong traction with our disposition strategy. In Q1, we sold 483 wholly owned homes for $206 million, well ahead of our expectations. Sales prices and days on market continue to beat our underwriting, and we are achieving pro forma stabilized cap rates in the low 4s. This strong momentum on dispositions enabled us to lean in confidently on share repurchases. In Q1, we repurchased approximately 17 million shares for roughly $439 million. Combined with share repurchases completed in the fourth quarter of 2025, we have fully utilized the $500 million authorization our Board approved last October, retiring a total of over 19 million shares at an average price of $25.86. To put that in context, during the first quarter, our average sale price was $427,000 per home, and we bought back our stock at an implied price of $270,000 per home. With the original $500 million share repurchase authorization now fully complete, our Board has approved a new $500 million repurchase authorization so that we may continue to have that tool in our toolkit. As always, we'll remain disciplined capital allocators, balancing liquidity and conservative balance sheet management with the opportunity to create value for our shareholders across the many levers available to us, including share repurchases. Moving now to our balance sheet, which remains in excellent shape. At quarter end, we had $1.3 billion in available liquidity through unrestricted cash and undrawn revolver capacity while total indebtedness stood at approximately $8.9 billion with no debt reaching final maturity before June 2027. Our net debt to adjusted EBITDA ratio was 5.6x, well within our long-term target range of 5.5x to 6x. That leverage profile, combined with 89.5% of our debt being fixed rate or swapped to fixed rate and approximately 90% of our wholly owned homes unencumbered, leaves us well positioned to navigate the current environment. Turning now to guidance. We are maintaining the full year outlook we provided in February. As I mentioned earlier, disposition volume is tracking ahead of our initial expectations, which accelerated our stock buyback pace, and our insurance renewal came in favorable relative to our assumptions. We view these as encouraging early reads, and we expect to have more to say once the majority of peak leasing season is behind us. In closing, the balance sheet is strong, the business is operating as expected, and we have the financial flexibility to keep doing what we said we would do, return capital to shareholders at these prices while maintaining the operational discipline that has defined how we manage this company. With that, operator, we're ready to begin the question-and-answer session.

[Operator Instructions] The first question comes from the line of Jana Galan with Bank of America.

Congrats on the nice start to the year. Just a question on the renewals, where you're sending them out for kind of spring and summer and what kind of strategy you're using there during this leasing season?

Yes, this is Tim. I appreciate your question. We generally don't provide details on what we're going out at for renewals. We are seeing a strong market out there. we believe that May will look a lot like April. And if you think about our general renewal rate trends throughout the year, there's not a whole lot of seasonality. There's a little bit of it, but generally, you kind of see that kind of mid-3s to mid-4% rate growth throughout the year. It's nice we're seeing good acceleration in our new lease rate growth. So we believe we're on track, and we're liking the fundamentals that we're seeing out there right now.

Next question comes from the line of Jamie Feldman with Wells Fargo.

There's a pretty meaningful spread between your renewal rate growth and your new lease rate growth in some of the heavier construction markets, some of the Sunbelt markets. Can you just talk about whether you think that narrows over time? Or as we just continue to see more supply, just continue to think that new lease will remain much more pressured than new -- than, renewal, I'm sorry.

Yes. Thanks, Jamie. Tim here again. I appreciate the question. This is one that comes up from time to time. What spreads generally speaking, tend to narrow as we work through our peak season, right? You see the renewal rates tend to stay flat, like I answered in the previous question, whereas the new lease growth, generally, what you see is you see a trend upward from Q1 towards the end of Q2, essentially closes the gap. Look, there are some markets, to your point, where there is a little bit of outsized year-over-year growth. There are a number of contributing factors, build-to-rent is one of them. But if you look at the data provided by outside folks that track the rent deliveries, we feel good about peak deliveries being in the past, that volume or that inventory starting to come down. We've also seen over the last, call it, 2 years, the mom-and-pop inventory has grown, but we're seeing that moderate really nicely as well. And each market is a little bit different, but we are starting to see some moderation in some of our larger markets. One thing on the supply side that I'll point out is that the year-over-year number at the start of the first quarter, it was large. We know that it's up year-over-year. A lot of outside people talking about this, lot of ways of tracking it. But we've seen that number moderate over the course of Q1 so that year-over-year number is actually much smaller than it was in January. So we really like the fundamentals right now that we're seeing. We hope to continue to see that absorption of product out there across the markets as peak season continues.

Next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.

Maybe Tim, going back to that last comment around inventory. I mean you've seen occupancy improve pretty significantly in recent months, but last year, that seasonal ramp seemed to peak a bit early. I guess just based on leading indicators you're seeing and maybe just what's assumed in guidance, do you think -- do you expect things will drop off similarly? Or was last year more of an anomaly and given your comment about inventory improving a bit, does it feel a little bit better this year?

Yes. Great question. We're cautiously optimistic about as we head deeper into peak leasing season, no year is exactly the same as the prior year. What gives us confidence is what we're seeing on the demand side. Look, demand in Q1 was generally quite healthy, although it's down from peak pandemic era demand. What we saw in our external funnel, what we saw Google Search, people asking about homes for rent, that was up slightly year-over-year. So you know that, that demand for single-family residence is there. On our internal funnel, we're seeing a really stable top of funnel. Our gross lead volume was actually up year-over-year. Obviously, it's spread across a bigger denominator in terms of inventory, but it really shows health in the demand side. We're seeing a nice conversion on our leads to showing in our portfolio. And I'd also point to the net migration that we see towards the Sunbelt. We look at Oxford economics data. We continue to see nice numbers, although down from the pandemic numbers, they're certainly still strong in the DFW Metroplex in Phoenix, in Charlotte, in Orlando, those are all strong migratory patterns that we're seeing there. So we feel good about where we are. Again, you typically see growth in the occupancy number as you head deeper into peak season and you see the effect of move-outs, peak season ins and you kind of see that occupancy go down a little bit towards the end of the very back of the year in December, you see it kind of pop back up as we head into the new year for the new cycle. So again, we're pretty happy with the fundamentals we're seeing, cautiously optimistic at this point.

Next question comes from the line of Steve Sakwa with Evercore ISI.

Given the, I guess, activity you've had on the disposition program, is that something that you would consider sort of ramping? And I guess, what are the tax implications around that? And if you were to kind of ramp that up, might that entail something like a special dividend as opposed to buybacks? Just given the dislocation, it just seems like the sales environment is pretty good for you.

Steve, this is Dallas. And I'll defer on the tax piece of this to Jon. He can jump in and sort of address that. Look, Scott and the team have done a really nice job of thinking ahead on a lot of this. This dates back to last year as we thought about our asset management strategies, what we're going to do with the business as we continue to see sort of an unsupportive share price. We've always been a good seller. I think up to this point in time, we sold almost like 20,000 homes back into the marketplace in the history of our business. We know how to do it. We know how to do it if the market is there. That's a really important point. And as you look at just like what we sold in the quarter, like I would bet close to 100% of those went to homeowners generally. So there's also a mortgage market factor here that allows us to sort of think about pricing and things like that. That being said, our assets are primarily infill assets, higher desirable locations. So there's a bid there. Generally, as we've gone to market to sell these homes. Scott and the team are looking for ways to be good capital allocators at the end of the day. So we recognize the spread that's there. We're going to continue to use it as a measured lever like we have in the past, albeit it's a far more attractive sort of cycle when you're buying back shares at the prices that we were buying them back at but it's a balanced approach. So we don't want to necessarily signal one way or the other. We're going to continue to watch it through Q2, look for opportunities to continue to recycle capital accretively and then put that capital into whichever lever makes the most sense of the time. It could be buybacks, it could be opportunities, things, et cetera. So I'll hand it over to Jon. Maybe, Jon, you want to talk a little bit about tax.

Yes, Steve, I think if I'm understanding your question correctly, you're sort of asking whether tax is a governor, Clearly, we have to adhere to the tax rules, the REIT rules, and that does impose some degree of limitation on what we can sell. But generally speaking, we have to distribute all our taxable income to stockholders and the homes that we are selling as a general rule have a lower tax basis. And so we are triggering a decent tax gain recognition. I think that the real governor is the fact that we renew about 80% of our leases and so the pool of homes available for sale at any given point in time is a pretty small subset of what we own. The great news is, as Dallas mentioned, we've had a lot of experience selling homes into the end user market. I think we're really quite good at that. And to the extent that market conditions allow us to, we'll continue to lean in. I think that's evidenced by the fact that we are ahead of where we expected to be from a disposition perspective, and that has allowed us to lean in and be as aggressive as we were with share repurchases.

Next question comes from the line of John Pawlowski with Green Street.

A follow-up on the dispositions in recent months. Obviously, we can see which markets you're selling out of, but curious for more qualitative color. Within a given market, have the dispositions been tilted towards what you consider lower cap rate assets? Are they more tilted towards higher cap rate assets that might have higher CapEx and lower forward growth? .

Yes. I think when you look at kind of where we've been disposing assets in the market, I mean, we have a list of homes that we pre-identified for sale, and it is, frankly, a combination of factors, John. and so there's a lot of different things we look at. Some of the homes are in submarkets where we don't want to have a long-term presence, some are high CapEx homes, et cetera. When you look at the way we look at the disposition cap rates, it's been roughly in the low 4% if you annualize the income in place on those homes. You can see that year-to-date, it's been about, call it, 40-ish percent has been Florida, 25% has been in California. But it really depends on which homes become vacant. We already know ahead of time which homes we've identified for sale, but we're really dependent upon knowing when those homes become. And so look, it's a combination of, generally speaking, we're selling the lower quality homes. We're not selling the highest quality homes in our portfolio. But again, from an asset management and capital allocation, we have pre-identified those homes that are not long-term holds for us, in the bottom percentage of the portfolio, and we're going to continue to target those homes as they become vacant and as we see opportunities to sell.

Next question comes from the line of Juan Sanabria with BMO.

This is Robin Haneland, I'm sitting in for Juan. I was curious about how market concessions impacted new leases in the first quarter in April and how you expect concessions to trend for the remainder of the leasing season.

Robin, this is Tim. I appreciate your question here on concessions. As we shared at the Citi conference, we actually have no same-store concessions in place today. We generally don't use concessions during peak season. And that's just something we tend to use late in the year. It's a tool in the toolbox. I will add that we do offer concessions on our build-to-rent communities during lease-up. And that is a pretty standard tool that developers use in the toolbox, especially in light of the fact that you're moving people in essentially to a construction zone as you're building the product. And so it's pretty standard to offer a concession on those. But again, that's not on our same-store portfolio. And we don't feel the need to use concessions right now at this point. We are liking up what we're seeing in terms of the fundamentals of this peak leasing season.

Next question comes from the line of Brad Heffern with RBC Capital Markets.

Yes. On guidance, I know you don't normally change it with the first quarter earnings, but you also don't normally have this very large repurchase number, and that's obviously an unknown quantity at this point. So I'm wondering should we view this guidance as just not being updated and not incorporating the benefit from the repurchases? Or is there some sort of offset that's also being incorporated?

Brad, it's Jon. We did anticipate leaning in and being aggressive on share repurchase. This is when we put our budget together for the year. We did get through it a little bit faster than I think we anticipated. But relative to guidance, I would say that there is not a hugely material benefit from that. And so I think that factored into the thinking as does the fact that there's still a lot of year ahead of us. The last couple of years, there's been some patterns of behavior in the operating environment that have changed. And so we just want to be cognizant of the fact that it's still early in the year. We're really pleased with where we are. I would say that big picture, we're right where we expected to be. We're ahead of where we expected to be on dispositions. But in terms of operating performance, in terms of revenue growth, expense growth, NOI growth, we're tracking very closely to our internal numbers. And so we're going to watch and wait and see. Feel good about where we are. As Tim said, we're cautiously optimistic. but not seeing anything that would cause us to revise guidance at this point.

Next question comes from the line of Michael Goldsmith with UBS.

This is Ami on for Michael. I'm curious, have you seen any change in demand for your third-party management platform or for development funding opportunities given some of the uncertainty for SFRs within the Road to Housing Act?

Good question. Generally speaking, we get inquiries about opportunities to manage. Like we've said in the past, we're highly selective about when, how and who -- in terms of how we want to operate because we really just want to run our operating playbook, generally speaking, as a rule of thumb. . That being said, there will be some noise that comes out of some of the legislative discussion that's been going on, and it certainly could create some opportunities. I think it's a bit too early to sort of tell or try to put a handicap on that in terms of the opportunity set. I would just say that the team here, both with our own portfolio metrics, and I think, hopefully, from what our customers see is just really consistent operations at the end of the day. And I think that has probably lent itself to Scott and the group being able to pursue or look at some other opportunities.

Next question comes from the line of Eric Wolfe with Citi.

Maybe I missed this and then the prior answers, but now that your occupancy is at a very strong level, above 97%, I guess are you starting to get more aggressive on new leases? Or just given your experience with the last couple of years, are you just trying to kind of keep it protected going into the third quarter? Just curious whether the sort of the higher occupancy number is changing your strategy on pricing? .

Eric, great question. This is Tim. Look, while occupancy, we said our April number was at 97.1%. That is something that we don't know exactly where it's going to go. We anticipate, like I mentioned earlier, that occupancy is going to kind of trend upwards as we head through peak season into late Q2 that tends to come down following move-in, move-out season. We price based on what the market will bear. We're constantly looking at supply and demand. And so we're cautiously optimistic that we'll be able to continue to show good numbers on the rent growth side, both on new and renewal. But again, it's a bit too early to predict that number at this point, Eric.

Next question comes from the line of Rich Hightower with Barclays.

So I know last quarter, you mentioned vis-a-vis your conversations, I guess, directly to Dallas with policymakers and so forth, you expressed some level of optimism about the talks. And obviously, since then, I think the news flow has generally been better, not worse for the single-family industry. But maybe just update us on the tone and the tenor and maybe some substance from those conversations the people seem to get it, some of the problematic elements of the legislation as it's currently kind of been publicized. Just help us understand where we are in that.

Yes. Happy to provide some color as I can at this point. Look, it's been a very active quarter in terms of advocacy work and we've obviously been on the front lines with some of our peers in spending a lot of time on the Hill. And as I shared in my opening remarks, to be candid, I think there's sort of 2 or 3 things that have come out of this process thus far. First is, I think policymakers and I think the media are much better educated as to what the industry does now versus maybe some of the taboo that has sort of been written about the industry for the last 10 years. I view that as an incredibly net positive. I thought the coverage has been fair. I think people are pointing out the fact that Invitation Homes, some of our peers are adding a lot of new supply and creating services that people want. That's the first stop. I just think there's a better understood point in the marketplace about who we are and what it is that we do. The second piece that I would sort of say is that I have been totally impressed by the amount of collaborative conversation we've had on both sides of the aisle in Washington, D.C. And I would also share that we've had really good conversations with both the administration, treasury, and elected officials that are trying to solve some of these housing supply issues. And I truly do believe that it's done in earnest, that people are trying to address the fact that we know we need more housing supply in the marketplace. That being said, the conversations are dynamic. I think people understand that you want to create regulatory framework that provides clarity to capital. And I think over the last 90 days, that's been a little murky. And that's created some noise, and I think everybody has appreciated to your point that we don't want to do things that stunt housing supply generally. It sounds like some of these provisions that are currently in its -- in its current form of being drafted or being reviewed and thought through to see if there can be effective, what I would call, change or revision maybe to try to land this in a safer place for both capital, for our residents, and for the opportunities to sort of provide these services. And that leads me to my last point, is that people that rent are voters and their residents and they matter. And I think that message has resonated very well on the Hill as well that we have 47 million households in this country that lease something and there should be rights associated with those households as well. So I don't think it's a simple solution whenever housing bills are drafted. A lot of work has gone into that, I think, by both sides. We've tried to stay as collaborative as we can with everyone through this process. We want to be viewed as a productive partner in housing. So that's been the approach we've taken as an industry. While legislation is never perfect, I think the goal here is that over time, this lands in the right place, so that everyone can have clarity, residents, capital and most importantly, the housing market so they can continue to evolve and create new supply.

Next question comes from the line of Adam Kramer with Morgan Stanley.

Dallas, really appreciate all the comments there, sort of the update on the legislation. Maybe just piggybacking off of that, as you sort of think back to invitation to the business and I think specifically with ResiBuilt, how are you thinking about sort of range of outcomes in terms of policy and sort of what that means for the different parts of the business. I guess from internal growth and then from external growth and ResiBuilt perspective?

Yes. So listen, a couple of things. One is there's, to use a golf analogy, there's a lot of graph between here and the hole to know where this thing sort of finally lands. I want to be really clear about that. We are glass half full guys generally, and we're always trying to think about ways that we can work with what we have. And I would even say with the bill in its current form, I think Scott and I are comfortable and so is Jon that there's a lot of ways to still bring new housing supply to the market. It's not perfect. and we hope it gets fixed, but the reality is like we think we can operate within the framework. I think as it relates to ResiBuilt, set the bill aside, our goal has been to get smarter and smarter as homebuilders in all of the strategic partnerships that we have and we'll continue to maintain, but also at some point in time to be able to control a little bit of our own destiny. And that can come in a variety of shapes and sizes. Scott's looking at a lot of very interesting opportunities. real time. I think it still weighs out in our earlier comments around how do we allocate capital in this environment. So development opportunities may not be use right now all the time. But there are certainly some things that are starting to look more and more palpable as we look for some of these opportunities. And then how you design these communities, the standards with which they are or are they townhome, how do you make sure that you operate within whatever potential framework is or isn't there in the future, and so maybe I'll hand it over to Scott just talk -- maybe to give a little bit broader sort of what we're seeing right now and what you -- what our learnings are early days on the ResiBuilt transaction.

Yes. And thanks, Dallas. It's now 3 months since we closed the acquisition of ResiBuilt. We're really pleased with the integration of their platform into Invitation Homes. ResiBuilt is executing on their existing midstream customer contracts that we took over as part of the acquisition. . We continue to build a backlog of partners for future fee build opportunities. Obviously, some projects have been put on hold until we have further clarity with the legislation in Washington. But at the end of the day, we're evaluating new opportunities. We're taking our time. And as we originally said when we made the acquisition, we look to grow the fee build side of the business, we look to grow the side of the business that we'll build for our joint venture partners and eventually for ourselves. And so nothing's changed from that game plan.

Next question comes from the line of Buck Horne with Raymond James.

My question has already been asked and answered. I appreciate that.

Next question comes from the line of Jesse Lederman with Zelman & Associates.

Another one for Scott. It looks like the company pared back some of its forward purchase agreements during the quarter of 76 net cancellations. So I'd love if you can provide some color on the thought process behind that? Because it seems like, if anything, overall industry fundamentals are improving relative to kind of where you were 3 months ago when you had about 200 net additions. So is it fair to assume the pullback was driven by kind of incremental legislative uncertainty since then? Or just would love to get your thoughts on that.

I mean, look, we just -- thanks, Jesse, good question. We've been following the signals we've seen in the capital markets in terms of our capital allocation strategy. Just as a reminder, we disclosed in the quarter that our current forward backlog is 556 which is around $200 million. This is down from almost 2,700 homes we had in the backlog at our peak in Q2 2024. And let's just as a reminder, Jesse, these homes that we have in the backlog, this is really the tail end of forward commitments that we had with the homebuilders where we started taking deliveries in 2025, and we're getting final deliveries over the next few quarters. And so we've really sort of dialed back on our acquisitions and forward commitments. We've really dialed up our dispositions. We've recognized the signals we've received in terms of our cost of capital and how we're allocating our capital. And so I think a lot of this is just driven by cost of capital and kind of where we go from there. So I think we're taking a cautious view of the market towards acquisitions at this point, and we'll see where we go from here, Jesse.

Next question comes from the line of Jade Rahmani with KBW.

This is Jason Sabshon on for Jade. So in the higher for longer rate environment and with the regulatory uncertainty, have you seen any movement in pricing from sellers? And is that something that you lead into or kind of more just wait and see on the regulation front?

This is Dallas. And I'll also let Scott chime in on this one as well. Look, I mean, we've actually seen sort of overall supply in the resale market be pretty steady. We haven't seen much movement in cap rates. I mean, you've certainly seen some opportunities maybe on finished spec inventory where there might be some call it, interesting scattered sort of approaches. But I think with sort of the murky outlook for the last 90 days of where the market is, I think capital is being very cautious in terms of how to think about one-off purchasing or anything like that. Now that being said, too, Remember, the end-user market is very mortgage market driven, generally speaking, especially if you're kind of in suburbs or tertiary outliers. We see less of that with our infill portfolio, as we talked about in our disposition program earlier. So we haven't seen a whole heck of a lot that seems all that compelling.

Next question comes from the line of John Pawlowski with Green Street.

Jon, a question on expenses. You mentioned insurance costs are trending favorably. Are there any other line items surprising positively or negatively as 2026 unfolds?

John, thanks for the question. I would say not yet. On insurance, when we introduced guidance, we were sort of on the cusp of completing our renewal. At that time, our expectation was that the property renewal would be slightly favorable, but it would be a materially harder renewal for general liability, workers' comp, auto, et cetera. . I would say that outlook was directionally correct, but ultimately, we were able to do slightly better on those nonproperty lines of coverage. The difference between the original midpoint we articulated in the updated midpoint in last night's release is a little less than $2 million. So ultimately not a hugely material change. As I noted earlier, I think at this stage of the year, things are tracking very closely to how we expected the early part of the year to unfold. But I would stress that it's still early, and so we're going to continue to watch expenses like a hawk.

And our last question comes from the line of Michael Goldsmith with UBS.

It's Ami. With turnover ticking slightly higher over the last couple of quarters, we were wondering if you were seeing any changes in reasons for move out that could be driving this? Or if it's just normalization off of the very low COVID era turnover levels?

This is Dallas and Tim, feel free to add any comments. Look, we've been, for the last year about having 16% to 17% of our move-outs be part of a home purchase opportunity. It's been I would call it very consistent and a little bit low for the last 4 quarters. I would also say that we basically see like 25% of our move-outs are tied to some sort of a transition in life, like a moving event, trying a new schools, et cetera. Those numbers have been for the last 4 quarters, incredibly consistent. Tim, do you want to add anything?

No, I think you covered it.

Okay. Thanks for the question.

This completes our question-and-answer session. I would now like to turn the conference back over to Dallas Tanner for any closing remarks.

We want to thank everyone for their support. Thanks for being on the call today. I look forward to seeing people at upcoming conferences. Thank you. .

Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.