Raymond James downgraded residential real estate investment trusts as rental housing demand deteriorates faster than companies acknowledge. Analyst Buck Horne warned that demand deterioration across all forms of rental housing has accelerated into February, with no signs of improvement expected for 2026 leasing cycles.

The firm downgraded Essex Property Trust, Invitation Homes Inc., and American Homes 4 Rent to Outperform from Strong Buy, citing multiple headwinds including A.I.-driven job displacements and immigration enforcement. Horne criticized many REITs for "whistling past the graveyard" by projecting normal seasonal leasing recovery despite clear evidence to the contrary.

High-frequency rent data shows more than 80 percent of tracked markets deteriorating over the past 90 days, with absorption timelines for new supply slipping as lease concessions grow. The early 2026 data signals "a softer peak leasing season" ahead as regulatory risks intensify and labor market softening continues, particularly among younger workers.