Earnings Call Transcript
American Homes 4 Rent (AMH)
Earnings Call Transcript - AMH Q4 2025
Operator, Operator
Greetings, and welcome to the AMH Fourth Quarter 2025 Earnings Conference Call. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nick Fromm, Vice President of Investor Relations. Thank you, Nick. You may begin.
Nicholas Fromm, Vice President of Investor Relations
Good morning, and thank you for joining us for our Fourth Quarter 2025 Earnings Conference call. With me today are Bryan Smith, Chief Executive Officer; Chris Lau, Chief Financial Officer; and Lincoln Palmer, Chief Operating Officer. Please be advised that this call may include forward-looking statements. All statements other than statements of historical fact included in this conference call are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements. These risks and other factors that could adversely affect our business and future results are described in our press releases and in our filings with the SEC. All forward-looking statements speak only as of today, February 20, 2026. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. A reconciliation of GAAP to non-GAAP financial measures is included in our earnings press release and supplemental information package. As a note, our operating and financial results, including GAAP and non-GAAP measures, are fully detailed in our earnings release and supplemental information package. You can find these documents as well as SEC reports and the audio webcast replay of this conference call on our website at www.amh.com. With that, I will turn the call over to our CEO, Bryan Smith.
Bryan Smith, CEO
Welcome, everyone, and thank you for joining us today. After our team delivered a solid quarter 2025, the new year is off to a busy start. Before we dive into our results and outlook, I would like to address the executive order the administration issued last month, showing its focus on housing affordability and the role that single-family rentals play. We appreciate the attention to this critical issue and continue to emphasize that AMH is part of the solution. Alongside our industry peers and partners, we are actively engaged with government and business leaders in Washington and around the country. These meetings have been encouraging as we continue to work with policymakers on the challenges of affordability, which will require sustained investment and collaboration across both the public and private sectors. Millions of Americans call single-family rentals home. In fact, consistently since 1965, roughly one-third of households in the United States are renters. This includes first responders, educators, and healthcare providers who rely on this option to live in the communities they serve. Our homes provide access to the same desirable neighborhoods at a fraction of the estimated monthly cost of homeownership. Further, a single-family rental home often represents an important step in a family's journey towards homeownership. Our surveys show that buying a home is the number one reason residents move out of our portfolio. Over the course of 2025, we estimate over 5,000 households, or approximately 30% of all move-outs, left their AMH home to purchase a house. Our strategy has always been centered around providing quality housing and an exceptional resident experience. In our early years, we achieved this by renovating homes and revitalizing neighborhoods across the country. During that time, housing starts slowed dramatically, causing shortages in many of our markets. In 2017, we made the strategic decision focused on ground-up development to meet the growing demand for single-family rentals. Since then, our in-house development program has added over 14,000 newly built homes across the country. For the past few years, AMH has not been materially active buying homes on the MLS; instead, we've been an active seller. In 2025 alone, we sold over 1,800 homes to individual homeowners. In 2026, we expect similar activity. Proceeds from these dispositions continue to provide the necessary capital for our development program. In 2026, we plan to deliver around 1,900 newly constructed homes across the portfolio. And the foundation for our future growth remains centered around adding homes through our in-house development program. Now let's turn to our fourth quarter and full-year results. In 2025, we delivered $1.87 of core FFO per share, representing year-over-year growth of 5.4%. Our consistent results not only demonstrate our commitment to operational excellence within the same home portfolio, but also underscore our approach to maximizing value across all areas of the business. Operationally, our teams did a great job navigating a challenging environment in the tail end of 2025, which included seasonal demand moderation and stubborn supply. This put downward pressure on rate and occupancy heading into the beginning of 2026. For the month of January, new, renewal and blended spreads were minus 1%, 3.5%, and 2.4%, respectively, while same-home average occupied days was 95%. Throughout the first quarter, our focus will continue to be on occupancy with our outlook for 2026, contemplating a flatter seasonal curve or rate growth occupancy than we would normally expect. Chris will cover guidance in more detail later in the call. As we look ahead, it is clear that there is a growing need for more high-quality housing in America. AMH, with its well-located homes, outstanding resident service, and new home development program, is committed to doing its part. Thank you to the team for your hard work last year and your continued commitment to excellence. With that, I'll turn the call over to Chris.
Christopher Lau, CFO
Thanks, Bryan, and good morning, everyone. As usual, I'll cover three areas in my comments today: first, a brief review of our year-end results; second, an update on our balance sheet and recent capital markets activity; and third, I'll close with an overview of our 2026 guidance and capital plan. Beginning with our operating results, we closed out 2025 with solid execution, generating quarterly net income attributable to common shareholders of $123.8 million or $0.33 per diluted share and $0.47 of quarterly core FFO per share in unit, representing 4.1% year-over-year growth. And for full year 2025, we generated net income attributable to common shareholders of $439 million or $1.18 per diluted share and $1.87 of core FFO per share in unit, representing 5.4% year-over-year growth, once again leading the residential sector. From an investment standpoint, during the quarter, we delivered 490 total homes from our AMH Development program. This brings our full year deliveries to over 2,300 homes, contributing much-needed newly constructed housing stock to 14 markets across the country. On the disposition front, we had another active quarter selling 646 properties, generating roughly $190 million of net proceeds. For the full year, we sold 1,827 properties for total net proceeds of approximately $570 million at an average disposition cap rate in the high 3%. As a reminder, our disposition properties are regularly sold to individual homeowners and provide us with a highly attractive form of capital to reinvest back into our AMH Development program. Next, I'd like to turn to our balance sheet and recent capital activity. At the end of the year, our net debt, including preferred shares to adjusted EBITDA was 5.2x, our $1.25 billion revolving credit facility had a $360 million balance, and we had approximately $110 million of cash available on the balance sheet. During the fourth quarter of 2025 and January of 2026, we fully utilized our remaining $265 million share repurchase authorization and repurchased a total of 8.4 million common shares representing approximately 2% of total share units outstanding. These shares were repurchased at an attractive price of $31.65 per share representing an attractive capital deployment opportunity complementing the long-term value created by our AMH Development program. Next, I'd like to share an overview of our initial 2026 guidance. For the full year, we expect core FFO per share unit of $1.89 to $1.95, which at the midpoint represents year-over-year growth of 2.7% and for the same home portfolio. At the midpoint, our expectations contemplate core revenues growth of 2.25%, which reflects average monthly realized rent growth in the 2.5% area and a 25 basis point year-over-year occupancy headwind as we expect 2026 average occupied days in the high 95% area. Additionally, our outlook contemplates core property operating expense growth of 2.75% driven by property tax growth in the 3% area, representing another year of below average growth and mid-2% growth on all other expenses, driven by another successful insurance renewal campaign and our continued commitment to efficiently managing controllable expenses. Putting together our same-home revenue and expense growth expectations, we expect 2026 same-home core NOI growth of 2% at the midpoint. From an investment standpoint, given the current capital market conditions, we have strategically moderated our development plan activities such that we expect to deploy approximately $750 million of total capital, including joint ventures, adding approximately 1,900 new constructed AMH development homes to our wholly-owned and joint venture portfolios. Specifically, for our wholly-owned portfolio, we expect to invest approximately $550 million of AMH capital, consisting of 1,400 homes added from our development program that we plan to fund entirely to recycled capital from our disposition program. Additionally, our full year outlook only contemplates the $115 million of share repurchases that were already executed in January. While the stock price continues to represent an attractive capital deployment opportunity, given the recent attention on our industry and ongoing capital market uncertainty, we plan to take a patient approach to the timing of any additional repurchases. However, as we continue to monitor the market. As mentioned in yesterday's release, our Board recently approved a new $500 million share repurchase authorization. Additionally, keep in mind that our balance sheet has a couple of hundred million dollars of opportunistic capital capacity given the strategic sizing of this year's development activities. And before we open the call to your questions, I wanted to close with a few final thoughts. 2025 was another great example of the power of the AMH platform, as we delivered another year of residential sector-leading core FFO growth. As we head into 2026, we remain committed to the AMH strategy, which has demonstrated our ability to create differentiated value for our residents, local communities, team members, and shareholders. And with that, we'll open the call to your questions.
Operator, Operator
We will now be conducting a question-and-answer session. Our first question comes from the line of Eric Wolfe with Citibank.
Eric Wolfe, Analyst
Can you talk about why you expect a flatter occupancy and rent growth curve than usual? Specifically, what does this mean for your blended rate growth expectation? Also, regarding occupancy, you mentioned it will be flatter this year, but based on your fourth quarter, you're down about 30 basis points year-over-year, which seems to be the expectation through full year 2026. Why does it appear you're anticipating something more seasonal like you experienced in 2025? Please help us understand both of these aspects.
Lincoln Palmer, COO
Yes. Thanks, Eric. This is Lincoln. As we approach 2025, we are beginning to observe the start of the leasing season, albeit slightly delayed compared to previous years. We had anticipated an increase in occupancy by the end of 2025 to begin the year on a strong note. However, some pricing fluctuations have resulted in us being a couple of hundred houses short, which provides context for our current situation. As we start the year, our main focus is on increasing occupancy during the leasing season, supported by pricing strategies. We expect occupancy to peak and then stabilize towards the end of the year. Regarding your question about the fourth quarter and typical trends, we anticipate that the stabilization in the latter half will be backed by the flat growth in new lease rates we are currently experiencing, along with a favorable expiration curve for 2026.
Christopher Lau, CFO
Yes. And then Eric, it's Chris. Just to make sure I kind of understand some of the numbers behind what Lincoln was talking about. On the full year context, we're thinking about new leases and about the flattish area for full year '26 renewals kind of consistently in the plus or minus 3% area on the full year. That then comes to our full year blended spread expectation in the low 2s. And as you heard us talking about in guidance view around occupancy being in the high 95s, which, to Lincoln's point, the focus right now is on occupancy through the first quarter, building a bit into the middle of the year. And then the objective is to hold and flatten that curve into the back part of the year.
Operator, Operator
Our next question comes from Jamie Feldman with Wells Fargo.
James Feldman, Analyst
I appreciate the thoughts on the seasonal curve. Maybe just as you thought about giving your guidance for the year, I mean, there's a lot of moving pieces out there on the political front, on the demand side, on the supply side, where would you say there's the most variability to your numbers? And maybe talk us through the high end, the low end of the range and what gets you to either end across the key line items.
Bryan Smith, CEO
Thanks, Jamie. The other thing that we're looking at this year is we've contemplated the building blocks of the guide is just the environment that we start the year end. Normally, as we kick off the season, the 200-300 house pickup that we're looking for probably isn't that big of the list. The challenges 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 first sale side with some of the rent conversions and then some build-to-rent that is sticky in some of the markets. Again, it's highly market-dependent. And we have markets where supply just is not an issue overall, but some of those markets that we've talked about before that took those high levels of deliveries that outpaced absorption over the last couple of years continue to struggle to work through that. On the demand side, we're seeing great demand for AMH products still. The traffic this year is not outside of normal year-over-year fluctuation. 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, but any dislocation in those supplies, we view as being temporary related to those suppliers, just in the long-term outlook for demand for AMH homes hasn't changed in most of our markets.
Operator, Operator
Our next question comes from the line of Steve Sakwa with Evercore ISI.
Steve Sakwa, Analyst
Just wanted to focus a little bit on the development pipeline. I mean it sounds like you're slowing deliveries a little bit and being a little bit more cautious, I guess, certainly given the capital markets environment. But like where are you seeing development yields for the product you're starting today based on today's rents and today's cost? What can you get? And I guess, how do you weigh deploying capital there against the buybacks? I know you're being probably a little bit cautious given the political environment, but sort of how do you weigh those two things today?
Bryan Smith, CEO
Steve, this is Bryan. Thanks for the question. I'll start with what the pipeline looks like kind of round out how we completed 2025 as well. As we talked about last year or in November, the going-in delivery development yields and active projects was slightly lower than the 5.5% we thought we'd get hit at the beginning of the year, really indicative of just general rent pressures across all of residential. So we ended last year somewhere in the 5.3% area ongoing in yields. And we're expecting similar yields in 2026 for the 1,900 homes that we're planning to deliver. Highly dependent on rent movement, but in the current environment, similar to 2025 is what our outlook is. And those are the ones that are in play right now or soon to be actively started.
Christopher Lau, CFO
And then, Steve, Chris here, just from a capital perspective, I think the key to all of this is appropriate sizing of capital. Everyone saw that we made a pretty quick pivot in terms of sizing of capital towards the end of 2025. And you can see that 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. On top of sizing to the development program, that then frees up incremental capital capacity for buybacks that can function as a nice complement to the development program and the long-term value creation there. You saw that we were active on that already, repurchasing about 2% of shares and units outstanding towards the end of '25 and beginning of '26, and we have capacity on the balance sheet for about a couple of hundred million dollars of incremental opportunistic capital deployment. But as I mentioned in prepared remarks, and as actually mentioned in your question, there's a lot of different moving pieces out there right now. And so we're going to make sure that we remain prudent and be patient in terms of how quickly we're moving on additional repurchases at this point.
Operator, Operator
Our next question comes from the line of Haendel St. Juste with Mizuho Securities.
Haendel St. Juste, Analyst
Can you provide some insight into operational expenses? You mentioned an expectation for taxes, possibly increasing by 3% to 4% or about 4% to 5%, which aligns with the long-term average. Is there anything noteworthy to discuss? Do you believe this level is sustainable in the near term? Additionally, could you shed some light on turnover and your expectations regarding recent insurance renewals?
Christopher Lau, CFO
Sure, Haendel, Chris here. Yes, look, on property taxes, overall, I think it's probably helpful to point out the fact that 2025 actually ended up being one of our lowest property tax growth years in company history, down in the 2.5% area. And as we move into 2026, we're expecting another year of what I would call moderate property tax growth in the plus or minus 3% area. A touch above 25%, but still well below long-term average; long-term average for us is 4% to 5%. Recall 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. And at least at the start of '26, it's probably not totally prudent to expect that we'll have two record back-to-back years on appeals. But nonetheless, 3% is something that I would still call very much in the maybe cooperative areas, the right characterization. And in terms of other components of expense growth for this year, our outlook also contemplates about a double-digit decrease in year-over-year insurance costs. That is based off of our successful renewal campaign that becomes effective at the end of this month. And then for remaining expenses, controllables in particular, we are expecting growth in the mid-3% area or so that I think represents another year of tight expense controls.
Operator, Operator
Our next question comes from the line of Jeff Spector with Bank of America.
Jeffrey Spector, Analyst
Great. If you could talk a little bit more about the supply pressure you saw in '25, what surprised you, would be a little bit more specific in terms of markets. And how that may impact your strategy going forward on markets? Again, Midwest continues to outperform. Do you want to try to lean in more there? given the pressure you're seeing, let's say, in the Sunbelt and your thoughts on that supply pressure in '26.
Lincoln Palmer, COO
Thanks, Jeff. This is Lincoln again. When I look at the individual markets, you can see the performance of most of those in the fourth quarter in the supplemental. If you just walk down across, you can see the footprints of the supply impact in those numbers. And again, I would just anchor back to the idea that the build in inventory and the standing accumulation of availability across all of the different product types is the result of those deliveries heavily outpacing in some markets. The absorption. I think all of us are relieved to see the starts and deliveries have slowed. Those are on the downswing, but we also understand that there is still some of the outstanding inventory that needs to be consumed. When I look across those markets, those that are heavily impacted, and they're impacted for different reasons. San Antonio, as an example, took heavy deliveries of multifamily. And so there's a lot of standing inventory there, and you can see that in the results. Phoenix is probably one of the epicenters for build-to-rent. And there's still some, albeit different product than ours, but still some levels of inventory on the build-to-rent side there. And then Las Vegas is one where we've probably seen a little bit more of for sale to for rent conversions and more competition from traditional landlords. So when it comes to the Midwest, we talked about this quite a bit. The underlying fundamentals there are still strong. We don't anticipate those changing in the short term. They did not take some of those high levels of deliveries of different types of product over the years. So there's still supply constrained to some extent, still relatively affordable, still a great place to live. And in the short term, that's not going to change. So we're watching the markets carefully and committed to most of them for the long term.
Operator, Operator
Our next question comes from the line of David Segall with Green Street.
David Segall, Analyst
Recognizing that you're going to take a more patient approach to additional buybacks this year. Would you need additional sales activity dispositions in order to fund any additional buybacks? And I recall that you had 20,000 homes that were released from collateral from being securitized last year. Would we see that as a source of additional funding this year?
Christopher Lau, CFO
Sure. David, Chris here. We're thinking about sizing of buybacks in general. I think one of the most important things to remember is the importance of balance in our approach, right, where we are balancing the importance of keeping the development program in motion, which is mission-critical, especially for long-term value creation. We're balancing that with maintaining our commitment to the balance sheet and targeted leverage levels, balanced with a, what I would call, a robust, but also responsible level of dispositions. And so as we think about incremental buybacks from here, as I mentioned in prepared remarks, today and over the course of the year, there is, I would call it, a couple of hundred million dollars of incremental capital capacity already on the balance sheet in the form of leverage capacity. And then beyond that would be the opportunity to recycle additional capital through the disposition program. You are exactly correct in that we are of the view that there's a pretty good healthy runway of disposition opportunity ahead of us, especially given the fact that we recently freed up 20,000 homes that were previously encumbered by our securitizations that were paid off over the last couple of years. But the natural governor there, like we've talked about plenty of times, is just how quickly those homes that are being identified out of those previously collateralized homes can actually be sold. And the governor there is the fact that we are selling homes in our disposition program ultimately to home buyers via the MLS and to sell a home to a home buyer via the MLS it needs to be vacant as we all know. And as we also know, 95% of the portfolio is not vacant. We take our responsibility as a housing provider very seriously, and we will never take housing away from an existing resident to sell a home, which means we need to let leases roll, tenants move out, and then we can prep the home for sale, which creates a little bit of a governor in terms of how many homes can actually be sold in one given year.
Operator, Operator
Our next question comes from the line of Buck Horne with Raymond James.
Buck Horne, Analyst
I was curious if you could comment a little bit about the news from the White House last night about potentially capping the single-family or the investor band at about 100 homes per organization. So if that's a much lower cap than previously contemplated, just going through a thought exercise of how do you think that plays out in the industry? Does that potentially force a lot of subscale operators to either pull rental inventory out of the market or sell inventory quickly? What do you think those other smaller tier operators are going to do if that type of cap is in place?
Bryan Smith, CEO
Thanks for your question, Buck. There has been significant attention on this issue this year. We have been actively engaging with policymakers at various levels of government. Referring back to the executive order, the initial task was to define the size and scope of institutional investors, with the treasury given 30 days to complete this task. That 30-day period ends today, and whether the final number will be 100 or something else is still uncertain. There are many evolving definitions and it’s unclear how everything will ultimately unfold. However, we have been investing heavily in our government affairs for years, and this active engagement puts us at the forefront of these discussions, enabling us to convey that we play a crucial role in addressing the housing solution, particularly regarding the supply shortage through our in-house development program. The implications for smaller operators versus larger build-to-rent properties versus scattered site properties remain ambiguous. On the positive side, these meetings have highlighted a clear recognition that supply has not kept pace with demand, and efforts to find supply solutions are ongoing. Additionally, we, along with our industry partners, are working to emphasize the importance of single-family rentals within the broader housing ecosystem. These are the messages we are conveying, but how the situation will ultimately evolve is still to be determined.
Operator, Operator
Our next question comes from the line of Brad Heffern with RBC Capital Markets.
Brad Heffern, Analyst
Yes. Obviously, I appreciate all the color on the supply impacts. When do you think we're going to be in a more normal environment just from a supply-demand balance standpoint?
Lincoln Palmer, COO
Lincoln here. I appreciate your question, which has come up frequently over the past couple of years. The key factor will be how quickly we can work through the existing inventory in the housing industry, which depends on demand. As I mentioned earlier, there is still demand for our product, but it will take some time to clear out the inventory. I'm not in a position to predict when that will happen. We don't have a specific timeline for the turnaround, but I can say we have more insight and data than ever before, and we are monitoring the situation closely. We are ready to make adjustments as soon as we see any positive signs indicating an improvement.
Operator, Operator
Our next question comes from the line of Jesse Lederman with Zelman.
Jesse Lederman, Analyst
When you spoke in late October, you noted your internal dashboards were indicating some inflection point in seasonal leasing activity. But it looks like in November versus December, occupancy was lower sequentially and that's continued here in January. So what changed over the subsequent few months relative to your expectations in October? And if you could just talk through the renewal rent growth falling roughly 70 basis points sequentially into January. That would be great as well.
Bryan Smith, CEO
Thank you, Jesse. The fourth quarter was challenging in terms of visibility. We did observe some moderation across the housing sector. For instance, in November, we began to experience a rise in activity. Our expectation was to increase occupancy by the end of the year and start the new year in a solid occupancy position, but that plan did not hold. We made adjustments to our pricing strategy which contributed to the slightly negative new lease rate growth in the fourth quarter, but the outcome did not meet our expectations. At the start of the year, we are doing everything possible to support occupancy, aiming to build it up during the peak season and ensuring we have occupied homes. This effort is backed by the new lease rate growth observed. Regarding renewals, there has been a slight moderation, acknowledging that building occupancy relies on both new leasing and retention within our portfolio. To support retention, we set renewal rates well in advance, which were sent out for January and February around the same time we were considering other market changes. Overall, we believe we are on track with renewals, with a slight moderation, but we expect the full year to be around the 3% area, which should help achieve our occupancy goals.
Operator, Operator
Our next question comes from the line of Michael Goldsmith with UBS.
Michael Goldsmith, Analyst
Can you talk a little bit about pricing trends at the build to rent versus the scattered site product? And are you offering concessions at either or both of those segments in your portfolio?
Bryan Smith, CEO
Michael, this is Bryan. Thank you for your question. Pricing trends are quite interesting. Earlier in the call, I mentioned that the yields for 2025 are influenced by the overall rate environment. When we compare our community leasing to scattered site leasing, we've observed a very favorable demand for our communities. We have been successfully leasing them without any concessions, including scattered site properties and the new development communities as they are being completed. It’s noteworthy that these homes are being delivered in active construction areas, yet we are achieving strong rents without relying heavily on concessions. Additionally, as Lincoln mentioned regarding supply and demand, as the supply pressure eases, we expect to see benefits for our new development product. This product is superior and commands premium rents, indicating strong demand and a return of pricing power. Consequently, we anticipate that yields on our new development deliveries will increase.
Operator, Operator
Our next question comes from the line of Jade Rahmani with KBW.
Jason Sabshon, Analyst
This is Jason Sabshon on for Jade. So homebuilders have leaned in or rate buy-downs and incentives lately. Can you comment on the supply-demand balance in key Sunbelt markets and whether you're seeing that aggressiveness from builders drive any increase in move-outs to buy?
Bryan Smith, CEO
Yes. Thanks for the question, Jason. Again, it's the for-sale markets, one portion of the supply that we watch very carefully. Our move-out to buy has remained pretty steady in the high 20s to 30% area. So we haven't seen a major shift. There are some anecdotes in some of the markets about incentives outside of rate buy-downs. As an example, some of the builders in our Florida markets got pretty aggressive, and we're willing to buy out some of our leases for our residents who were interested in buying homes. We're watching that very carefully. It's happening on the fringe, again, not affecting the overall trend. And then, of course, I think everybody is also interested in how many of those for-sale homes are coming back into the portfolio or into the overall inventory. And we're watching that carefully as well. So not a huge impact so far, just small anecdotes of builders trying to respond to do their part to give some market share.
Operator, Operator
Our next question comes from Jason Wayne with Barclays.
Unknown Analyst, Analyst
Thank you for the question. When looking at the development pipeline, there are some lots in markets outside of the Sunbelt, such as the Midwest and West Coast. I would like to know where the deliveries this year are located and where you prefer to initiate new developments.
Bryan Smith, CEO
Yes, thank you. This is Bryan. In our development program in the Midwest, it's focused on Columbus. And if you look at our supplemental, you can see what the lot pipeline is behind that. We really like the Columbus market. We really like a number of the markets in the Carolinas. Seattle has been strong as well. So you can see the pipeline there, and we're looking forward to delivering really good product into those high-demand markets. And then some of the other markets where we have a significant development presence, we feel very good about those markets over the long term, but there may be some short-term pressures referring more towards the lot pipeline that we have in places like Arizona and Las Vegas.
Operator, Operator
Our next question comes from the line of Eric Wolfe with Citibank.
Eric Wolfe, Analyst
Thanks for taking the follow-up. Looking at the changes in your same-store pool, your third quarter occupancy was 95%, like as reported last quarter, and now it's 96.4%. So there's a similar little bump in the occupancy based on what you sold. I guess what is the reason for that? I mean, are you selling more vacant homes than normal? Why was there such a sort of jump in the occupancy based on the new same-store pool? Because obviously, it creates a little bit of a more difficult comp for you.
Christopher Lau, CFO
Eric, Chris here. Essentially, what you're seeing is the result of smart asset management decisions where we are identifying some of the outlier and/or underperforming properties through our asset management process for disposition. And so over time, as we are identifying those underperformers, they're moving their way into the disposition program and ultimately being sold. Obviously, that has an upward improving lift to the remainder of the same-store pool. There's always a little bit of movement from one quarter to the next usually not terribly large, but it's a function of making smart asset management decisions at the unit level.
Eric Wolfe, Analyst
Okay. And then last question. You normally have a pretty good idea, not perfect, but good idea of sort of what forward occupancy looks like and I know it can miss based on various factors. But I guess, as you look at things 30, 60 days out based on your revenue management system, are you seeing that typical lift in occupancy that you normally see at this time of year, especially since you've throttled back a bit. Just curious if you can give us a perspective on sort of where you expect to go over the next couple of months?
Lincoln Palmer, COO
Yes. Thanks. This is Lincoln again. As I mentioned before, a little bit slower start to the leasing season than we would have preferred. However, we are seeing the normal trend in activity that's moving upwards. So again, with the focus on building occupancy, we'd expect to move into the 96s of the peak of the season and then again, hold some of that into the back of the year. So over the next couple of months, we would expect if we execute well, that we'll see the occupancy goal.
Operator, Operator
Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets.
Austin Wurschmidt, Analyst
Great. Beyond the supply challenge markets that you've discussed, is the moderation you're assuming in guidance around lease rate growth or that flatter seasonal curve that you described. Is it broad-based? Are you seeing it more pronounced than either the Sunbelt or Midwest markets? And then on top of that, just curious how much that's playing into your development decisions.
Lincoln Palmer, COO
Maybe I'll just give some commentary on the overall market and then Bryan or Chris want to comment on the development they can. Yes. Look, again, I think that what we're seeing is the effect of broad-based supply across all housing types. It is very market-specific, and I wouldn't want to point to one factor that would look like it's affecting all of our markets, especially equally. Like I said earlier, we have many markets that are not supply pressure at all. Take Seattle and Salt Lake City as an example, where not only have they not had heavy deliveries over the last couple of years, but they're also significantly geographically constrained. It's difficult to build inventory into those markets. So it's not equal across all of them, and we evaluate each of them individually.
Christopher Lau, CFO
Yes, Austin, this is Chris. Regarding the second part of your question about development, the sizing of the development program depends on the relative returns and yields from the development compared to current capital market conditions and cost of capital. As Bryan mentioned, one of the main factors affecting the current yield profile is market rent growth. On the construction side, our teams have excelled at controlling costs throughout the development program. If we look at hard vertical construction costs for building a home in 2026, they are essentially flat or even slightly lower than in 2025 compared to 2024, which is excellent. Ultimately, the size of the development program is influenced by relative returns and yields in relation to capital market conditions, the cost of capital, and other uses of that capital, along with freeing up capacity for repurchases, which you have already seen us actively pursue.
Operator, Operator
Our next question comes from the line of Buck Horne with Raymond James.
Buck Horne, Analyst
Thank you for the follow-up. I appreciate the time. I wanted to discuss the dispositions executed not only in the fourth quarter but year-to-date as well. Considering what you've sold, it seems the net proceeds were just under $300,000 per house. Most of your markets have median resale prices closer to $400,000. How would you characterize the tier of the dispositions you're selling? Are these houses typically in the lower quartile, the middle range, or do they fairly represent the value of the homes in your portfolio? How should investors think about this?
Bryan Smith, CEO
Yes. Thanks, Buck. This is Bryan. The typical property that we're disposing of that we're selling really is a non-core asset. And in many cases, it's maybe not the location that we want or there are other characteristics that, that just make it have a different growth profile to the rest of the assets. So I think it's fair to say that this average sales price would be lower for that cohort than the rest of our homes, especially the new homes that we're delivering on the development side, which are superior quality and location. But the number one reason for disposition for us is location. A lot of it is the fact that we're finally getting access to homes that we acquired via consolidation in the past, many of which were subsequently securitized. So we're getting access to some product that might be a little bit lower level than what's typical across our portfolio.
Operator, Operator
Our next question comes from the line of Brad Heffern with RBC Capital Markets.
Brad Heffern, Analyst
Chris, just given all the political noise, do you have an elevated level of advocacy costs or anything like that, that are in G&A and that are having an impact on the guide?
Christopher Lau, CFO
Yes. Good question. I appreciate you asking. As everyone knows, we started investing in our own government affairs teams, department, resources, and initiatives years ago at this point. And so there's already just a structural component of our cost structure represented by government affairs and advocacy-related costs. Again, we're expecting to incur those in 2026. Each year, those dollars and resources are directed a little bit differently. Obviously, this year, those will be directed towards the current matter at hand. The right way to think about it is a little bit under $0.01 or so is what just regularly runs through our numbers each year. And then as we progress throughout the course of this year to the extent that those numbers change, if we need more or what not difficult to crystal ball that at this point. But to the extent that those numbers change, we will make sure that we call them out separately so everyone can clearly understand those dollars separate and apart from the run rate cost structure of the business.
Operator, Operator
Our next question comes from the line of Steve Sakwa with Evercore ISI.
Steve Sakwa, Analyst
I just wanted to follow up on the dispositions. What constraints, I guess, outside of tax issues that you have around dispositions, meaning you want certain size of homes or certain scale in the market. So to what extent are your dispositions limited by you wanting to have a good footprint in each market as you think about kind of the disconnect between kind of the sales values and kind of where the stocks trading?
Christopher Lau, CFO
Yes, Steve, Chris here. I can start that one. Look, there's a number of different perspectives that we need to think about dispositions through. Tax planning is definitely one of them. The other piece, like I was talking about earlier, is just the natural timing governor in terms of how many homes can be sold in any one given year. Considering how much collateral has been freed up from our securitizations like we were talking about. We are of the view that there's a pretty good runway of disposition candidates ahead of us, but the natural governor there will be the sheer volume of those that can be sold in any one given year considering we need to let leases roll, residents move out, and then homes can go into the market. At that point, they move quickly. But obviously, leases need to roll first. That's the main governor in consideration. We're thinking about the amount of volume that can be done in any one given year.
Bryan Smith, CEO
Steve, this is Bryan. Further to your question on market sizing, our operating platform has proven to be very efficient at different sizes. What we're doing is we're looking at these houses at an individual level and finding the ones that are non-core, have different growth prospects than we could find on the development program as an example. We're able to strategically prune these houses and then reinvest them in areas with better long-term growth.
Operator, Operator
There are no further questions. I'd like to pass the call back over to management for any closing remarks.
Bryan Smith, CEO
I'd like to thank everyone for your time today. We appreciate the continued interest in AMH and look forward to speaking with you next quarter.
Operator, Operator
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.