Starwood Capital CEO Barry Sternlicht doesn’t hold back on his Federal Reserve criticism: On multiple occasions he’s told CNBC anchors that the central bank’s aggressive interest rate hikes could soon spur a deep recession.

It’s easy to see why Sternlicht is so openly critical of the Fed: Starwood primarily invests in real estate, where the Fed’s interest rate hikes have already caused a great deal of economic pain.

Last week, Bloomberg reported that Starwood Real Estate Income Trust plans to shop more than 2,000 single-family rentals. Starwood—which declined Fortune‘s interview request—hasn’t publicly explained its motive for pulling back from the residential housing market, where its REIT owns over 3,200 single-family homes. That said, it’s clear that the decision to shop these 2,000 homes comes as Starwood faces an uptick in redemption requests and endures pain in the commercial real estate sector.

At first glance, one might assume Wall Street types would pull back from the commercial real estate space—where office values are sinking fast—and instead pile into the residential housing market—where national home values are rising again after passing through a mild home price correction last fall.

However, institutional firms are also timid on the residential front. According to an analysis conducted by John Burns Research and Consulting, institutional investors—those owning over 1,000 homes—bought 90% fewer homes in January and February than they did in the first two months of 2022.

Why are institutional investors pulling back so fast from the U.S. housing market?

It boils down to the fact that the financial return on each additional home added just isn’t that great right now after factoring in interest rates, house prices, and rents. Not to mention, some big investors like Yieldstreet think that national house prices, despite jumping a bit this spring, are poised for another step down.

“We’re pretty much on pause across all [homebuying] strategies,” Tejas Joshi, director of single-family residential at Yieldstreet, which owns over 700 single-family homes, recently told Fortune. “I don’t think [house] prices have bottomed yet… On average, we have another 5% decline nationally, and it’ll vary by market. Peak-to-trough, [we’re expecting] 12% to 15% [national] decline.”

Not only are institutional investors buying fewer homes, some are reducing their overall single-family portfolios.

Look no further than Invitation Homes, the largest owner of U.S. single-family rental homes, which recently became a net seller. In the first quarter of 2023, Invitation Homes bought 194 homes while it sold off 297.

A year earlier, in the first quarter of 2022, Invitation Homes—which Blackstone helped to grow before divesting in 2019—bought 822 single-family homes and sold off only 147.

Invitation Homes isn't alone: American Homes 4 Rent was also a net seller in the first quarter.

In the first quarter of 2023, American Homes 4 Rent sold off more single-family homes (666) than it bought (312). That net decline saw the Las Vegas–based company's portfolio shrink from 58,993 rental homes across the country to 58,639 homes.

A year earlier, in the first quarter of 2022, American Homes 4 Rent bought 1,131 homes and only sold off 171 homes.