Year-over-Year Gains for Single-Family Built-for-Rent Starts

Single-family built-for-rent construction posted year-over-year gains as of the first quarter of 2024, as builders sought to add additional rental housing in a market facing ongoing, elevated mortgage interest rates.

According to NAHB’s analysis of data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design, there were approximately 18,000 single-family built-for-rent (SFBFR) starts during the first quarter of 2024. This is 20% higher than the first quarter of 2023, albeit with favorable comps because of a weak start of 2023. Over the last four quarters, 80,000 such homes began construction, which is almost a 16% increase compared to the 69,000 estimated SFBFR starts in the four quarters prior to that period.

The SFBFR market is a source of inventory amid challenges over housing affordability and downpayment requirements in the for-sale market, particularly during a period when a growing number of people want more space and a single-family structure. Single-family built-for-rent construction differs in terms of structural characteristics compared to other newly-built single-family homes, particularly with respect to home size.

However, investor demand for single-family homes — both existing and new — has cooled with higher interest rates. Nonetheless, builders continue to build smaller projects of built-for-rent homes for their own operation. Given affordability challenges in the for-sale market, the SFBFR market will likely retain an elevated market share even as the sector cools in the quarters ahead.

NAHB Chief Economist Dr. Robert Dietz provides more insights on this sector in this Eye on Housing post.