In this article, we will discuss the 12 best residential real estate stocks to buy according to analysts.
Residential Real Estate in 2025
As reported by CNBC, a troubling sign for the spring market is the homebuyer mortgage demand declining. While more listings are coming up for sale, home buyers are not really convinced to be a part of the spring housing market. The supply of homes for sale is up 25% as compared to the prior year, with the supply gain coming from homes sitting on the market for longer.
Redfin reveals that the average time to sell a home in the month of January was 54 days which is the longest since March 2020. Regardless, the supply lags from January 2019 by 25%. Back in January, Redfin reported that home prices have risen year-over-year in all 50 of the most populous metropolitan areas in the United States in December. Redfin Senior Economist Elijah de la Campa, reiterated the state of aggravating unaffordability, stating:
“Affordable housing havens have become harder and harder to come by; even places that saw some price relief last year, like Texas and Florida, are now seeing prices tick back up. Many people looking to move this year will likely opt to rent because it’s the more affordable option and rental affordability is expected to improve as more supply comes on the market.”
Brown Harris Stevens CEO Bess Freedman, recently joined CNBC to discuss the current housing affordability in the US. In her opinion, the current mortgage rates are the new normal and they could stay in the 6% range for quite some time even though they might dip a bit lower. Affordability remains an issue with first-time homebuyers nearing their 40s while they used to be 28 or 29 years old some ten years ago. The market is picking up but buyers continue to be rate sensitive. More activity could be seen if the rates decline even slightly in the next months. Overall, she tends to be bullish on housing saying that the US needs to get to a place where young people can buy their first home.
With that being said, let’s move to the 12 best residential real estate stocks to buy according to analysts.
An aerial view of a manufactured home community, with the many homes in a grid.
Our Methodology:
In order to compile a list of the 12 best residential real estate stocks to buy according to analysts, we first used a stock screener to screen residential real estate stocks that have the highest market caps. Moving on, we shortlisted the 12 stocks with the highest average upside potentials, as of February 5. The 12 best residential real estate stocks to buy according to analysts have been arranged in ascending order of their average upside potentials.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Best Residential Real Estate Stocks To Buy According to Analysts
12. Independence Realty Trust, Inc. (NYSE:IRT)
Average Upside Potential: 13.52%
Independence Realty Trust, Inc. (NYSE:IRT) is a leading multifamily real estate investment trust that owns and operates multifamily apartment properties across non-gateway US markets such as Atlanta, Louisville, Memphis, and Raleigh.
Independence Realty Trust, Inc. (NYSE:IRT) has established a differentiated portfolio in attractive markets. The firm’s portfolio is focused on the high-growth Sunbelt and Midwest regions which tends to be beneficial since the regions have shown strong fundamentals with favorable population migration trends due to a lower cost of living, better tax policy, and growing economic opportunity.
As compared to peers in non-gateway and coastal markets, the REIT has been successfully delivering industry-leading operating performance over the past few years, outpacing industry growth. Due to the firm’s attractive location in Sunbelt markets, as well as its investments in value-add renovations and new development initiatives, the momentum for the business is expected to continue.
11. American Homes 4 Rent (NYSE:AMH)
Average Upside Potential: 16.31%
American Homes 4 Rent (NYSE:AMH) is an internally managed Maryland real estate investment trust that is a leading large-scale integrated owner, operator, and developer of single-family rental homes.
AMH is one of the leading single-family rental companies and homebuilders in the United States, regarded for quality and integrity. The firm has reimagined single-family living to make leasing a home easy and accessible since 2012. AMH owned nearly 60,000 single-family properties in the Southeast, Midwest, Southwest, and Mountain West regions of the US, as of September 30, 2024.
Long-term tailwinds such as national high-quality single-family housing shortage, limited new construction, single-family rents being a lot cheaper than home ownership costs, and millennials aging into prime single-family living years, tend to favor AMH. In a favorable market, AMH is pursuing a consistent and strong external growth strategy. In October 2024, the firm opportunistically acquired a portfolio of nearly 1,700 high-quality detached single-family rental homes that overlay well within the firm’s existing footprint.
10. UMH Properties, Inc. (NYSE:UMH)
Average Upside Potential: 20.50%
UMH Properties, Inc. (NYSE:UMH) owns and operates manufactured home communities. The REIT has grown from owning 13 communities consisting of 2,675 homesites in 1985 when it went public to owning and operating 139 manufactured home communities with approximately 26,200 developed homesites currently. These communities are situated in states including New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Maryland, Michigan, Alabama, South Carolina, and Georgia.
While UMH has a robust portfolio of manufactured home communities, the REIT is also well-positioned for growth with 3,300 existing vacant lots to fill, and more than 2,200 vacant acres on which to build nearly 8,800 future lots. UMH benefits from both selling affordable homes and providing attractive rental options in a tight housing market. With higher mortgage rates incentivizing homeowners not to move, a limited supply, and the average cost of a manufactured home lower than that of a site-built home, UMH is in a good position.
Currently, UMH Properties, Inc. (NYSE:UMH) is seeking benefit from its significant exposure to the Marcellus and Utica Shale regions which have the potential to be among the largest sources of natural gas globally. The real estate investment trust is witnessing increased demand for residential units in the region.
9. Toll Brothers, Inc. (NYSE:TOL)
Average Upside Potential: 21.44%
Toll Brothers, Inc. (NYSE:TOL) was founded in southeastern Pennsylvania in 1967 by the brothers Bob and Bruce. The firm expanded across the United States over the years and emerged as America’s luxury home builder. Currently, TOL operates in 24 states and more than 60 markets nationwide.
Toll Brothers, Inc. (NYSE:TOL) is in a good spot with its widespread national footprint positioning it for growth, featuring the widest offering of luxury homes and catering to the most affluent customers in its industry. The Toll Brothers advantage setting the homebuilder apart comes from the prestigious and desirable locations it chooses to build in, the distinctive architecture of a Toll Brothers home, unrivaled choice, and exceptional customer service.
Some of the factors supporting demand for Toll Brothers include a limited supply of new and resale homes on the market, millennials in prime home-buying years, and a growing desire for high-quality move-in ready homes. The home builder saw 2024 as its strongest year ever, during which it witnessed a record $10.6 billion home sales revenue. For fiscal 2025, Toll Brothers is striving to boost its community count.
8. Legacy Housing Corporation (NASDAQ:LEGH)
Average Upside Potential: 23.00%
Legacy Housing Corporation (NASDAQ:LEGH) is one of the largest producers of manufactured homes in the United States. It builds, sells, and finances manufactured homes and tiny houses that are distributed through a network of independent retailers and company-owned stores. The company currently concentrates its operations in the southwest and southeast regions of the country.
Legacy Housing Corporation (NASDAQ:LEGH) is one of the most vertically integrated companies in the industry, offering a complete solution to its customers. The company is recognized as a leader and innovator in the manufactured housing industry. Legacy has earned itself a solid position based on designing family-functional floor plans and offering features exceeding most competitors. With structures ranging from 320 to 399 square feet, Legacy also serves as one of the industry leaders in the tiny house market.
Legacy positions itself for exponential growth with affordable housing receiving popularity and desirability among consumers in the US housing market. The market for Legacy products is expected to strengthen into the new year with housing affordability hovering near all-time lows. As of February 5, analysts point to an average upside potential of 23.00% for the stock thereby ranking it among the best residential real estate stocks to invest in.
7. BRT Apartments Corp. (NYSE:BRT)
Average Upside Potential: 25.43%
BRT Apartments Corp. (NYSE:BRT) is an internally managed REIT that focuses on the ownership, operation, and development of multi-family properties primarily in Sun Belt locations. The firm owns or has interests in 29 multi-family properties with 7,947 units in 11 states, as of September 30, 2024.
BRT Apartments Corp. (NYSE:BRT) has lived decades of demonstrated success in multi-family in its history. The firm’s high-quality portfolio has generated above-average AFFO growth compared to multi-family non-gateway companies. The national multifamily REIT seeks to invest in properties and acquisitions that are well-positioned in areas demonstrating positive indications of growth with catalysts promoting employment and housing demand.
A focus on Sunbelt locations offers compelling advantages to the REIT, due to the predominance of pro-business states, alongside better population and job growth from migration patterns and business investment. However, the operational environment in the firm’s combined portfolio is expected to be consistent with other Sunbelt-focused operators with new supply muting new and renewal lease rent growth. On the bright side, this new supply is expected to moderate in 2025 and 2026.
6. Taylor Morrison Home Corporation (NYSE:TMHC)
Average Upside Potential: 33.14%
Taylor Morrison Home Corporation (NYSE:TMHC) is one of the leading American homebuilders which has operations across 20 markets in 12 states and caters to the needs of diverse consumers including first-time, move-up, and resort lifestyle homebuyers and renters. The company’s financial services segment offers mortgage financing, title services, and homeowners’ insurance.
TMHC has a company legacy that dates back over 100 years. The home builder favors from an attractive national footprint spanning some of the highest-growth markets and prime locations across the US. This concentration in prime locations enhances its portfolio’s through-the-cycle resiliency. Alongside a leading national, regional, and local scale, the homebuilder continues to benefit from a diverse portfolio serving consumers across the homebuyer spectrum while its buyers tend to be well-qualified with financial flexibility.
Taylor Morrison Home Corporation (NYSE:TMHC) delivered better-than-expected results in 2024’s third quarter. Earnings per diluted share witnessed an over 50% year-over-year growth while home closings revenue increased 26% to $2.0 billion. TMHC is benefitting from healthy demand and pricing resiliency across its portfolio as it caters to the needs of well-qualified homebuyers with good product offerings in prime community locations.
5. PulteGroup, Inc. (NYSE:PHM)
Average Upside Potential: 35.89%
PulteGroup, Inc. (NYSE:PHM) is one of the largest homebuilders in the US with operations in over 40 major cities. It was founded in 1950 and has delivered almost 750,000 homes across the country. The homebuilder caters to first-time, move-up, and active-adult homebuyers through its brands Pulte, Centex, Del Webb, DiVosta, American West, and John Wieland Homes and Neighborhoods.
PulteGroup boasts a strong operating platform that remains diversified enough across the major homebuying markets. As the nation’s third-largest builder, the firm continues to expand its market platform, with recent market entry in Portland, Denver, and Salt Lake City, among others. Additionally, the homebuilder benefits from operating in an undersupplied market. Through a portfolio of industry-leading brands, Pulte demonstrates an unmatched ability to serve all buyer groups.
PulteGroup, Inc. (NYSE:PHM) recently closed a record-setting year as it reported its strong fourth quarter of 2024 results. The homebuilder posted nearly $18 billion in revenues and net income of $3.1 billion for the full year. With quicker construction cycle times complimented by targeted sales incentives, Pulte successfully generated a sales backlog and inventory in process that places it in a good spot for the coming spring selling season.
4. Tri Pointe Homes, Inc. (NYSE:TPH)
Average Upside Potential: 37.40%
Tri Pointe Homes, Inc. (NYSE:TPH) is another large home builder in the United States that has operations in 12 states and the District of Columbia. The home builder has been engaging in the construction of premium homes and communities with deep ties to the communities it serves.
Tri Pointe Homes, Inc. (NYSE:TPH) is a recognized leader in innovative design, energy efficiency, customer experience, and environmentally friendly business practices. TPH serves as a growth company with national reach and local market expertise in addition to a seasoned leadership team known for operational excellence.
The financial results for the recent quarter of Tri Pointe Homes, Inc. (NYSE:TPH), 2024’s third quarter, went robust. The homebuilder recorded a 32% rise in deliveries to 1,619 homes while seeing a 35% growth in homes sales revenue to $1.1 billion. The housing market dynamics including a constant supply-demand imbalance and favorable demographics present a favorable environment for TPH.
3. KE Holdings Inc. (NYSE:BEKE)
Average Upside Potential: 48.87%
KE Holdings Inc. (NYSE:BEKE) operates Beike, an integrated online and offline platform for housing transactions and services in China. It also owns and operates Lianjia, China’s leading real estate brokerage brand which is an integral part of the Beike platform. The company operates through segments including Existing Home Transaction Services, New Home Transaction Services, Home Renovation and Furnishing, and Emerging and Other Services.
KE Holdings Inc. (NYSE:BEKE) is a pioneer in building the infrastructure and standards to reinvent how Chinese service providers and customers complete housing transactions including existing and new home sales, home rentals, home renovation and furnishing, and other services. The company has an extensive 23 years of operating experience through Lianjia since its founding in 2001 thereby being equipped with solid insights into customer needs and markets.
The firm demonstrated a proactive growth momentum in its most recent quarter, the third quarter of 2024. For the quarter, KE Holdings Inc. (NYSE:BEKE) recorded net revenues of RMB22.6 billion, up 26.8% year-over-year, with each of the business lines achieving solid results. The overall revenue increase was driven by the rise of net revenues from new home transaction services and the expansion of the home renovation and furnishing and home rental business.
2. M/I Homes, Inc. (NYSE:MHO)
Average Upside Potential: 61.98%
M/I Homes, Inc. (NYSE:MHO) is a US single-family home builder with more than 40 years of experience in building quality new construction homes across the nation. While the firm was founded in 1976 by Irving and Melvin Schottenstein, it has materialized the dreams of more than 150,000 homeowners over the years. The firm has a diversified customer base including first-time, move-up, luxury, and empty-nester buyers.
M/I Homes has earned itself solid repute by focusing on innovative design, superior customer service, quality construction, and premium locations. The firm favors from a promising scale and market share, with a diversified geographic footprint across 17 markets in 10 states in addition to a top 5 position in 8 markets and a top 10 position in 13 markets, as revealed by the latest investor presentation.
The homebuilder tends to be in a robust financial condition as it closed 2024 with all-time records in homes delivered, revenue, and income. Homes delivered by M/I Homes, Inc. (NYSE:MHO) in 2024’s fourth quarter hit an all-time quarterly record of 2,402. Simultaneously, home deliveries for the twelve months ended December 31 rose 12% to a record 9,055. While 2024 revenue rose 12% to $4.5 billion, net income climbed 21% to $564 million.
1. Forestar Group Inc. (NYSE:FOR)
Average Upside Potential: 70.92%
Forestar Group Inc. (NYSE:FOR) is one of the largest residential community developers in the United States which primarily acquires entitled real estate and develops it into finished residential lots for sale to homebuilders. Forestar is a majority-owned subsidiary of D.R. Horton.
Forestar’s strategic relationship with D.R. Horton, one of the largest American homebuilders, presents it with significant built-in demand for current and future lot deliveries. The firm is more geographically diversified than most homebuilders with active projects in 59 markets in 24 states and 95,100 lots controlled, as of September 30, 2024. Forestar delivered more than 15,000 residential lots during fiscal 2024 while witnessing a 1,078% increase in lots sold between FY 2018 and 2024.
As a highly differentiated, pure-play, residential lot developer for the affordably priced single-family home market, Forestar Group Inc. (NYSE:FOR) is demonstrating solid operational execution and increased profitability. The firm closed fiscal 2024 with net income increasing 22% and revenues increasing 5%, year-over-year. Over the last five years, the firm invested nearly $6.7 billion in land acquisition and development and delivered more than 70,000 finished lots to local, regional, and national homebuilders.
While we acknowledge the potential of FOR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than FOR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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