Builders Add Housing Supply Through Single-Family Built-for-Rent Construction

Single-family built-for-rent (SFBFR) construction posted year-over-year gains as of the second 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 23,000 single-family built-for-rent (SFBFR) starts during the second quarter of 2024. This is almost 10% higher than the second quarter of 2023. Over the last four quarters, 83,000 such homes began construction, which is a more than 20% increase compared to the 69,000 estimated SFBFR starts in the four quarters prior to that period.

Given the relatively small size of this market segment, the quarter-to-quarter movements typically are not statistically significant. The current four-quarter moving average of market share (8%) is nonetheless higher than the historical average of 2.7% (1992-2012).

Importantly, as measured for this analysis, the estimates noted include only homes built and held by the builder for rental purposes. The estimates exclude homes that are sold to another party for rental purposes, which NAHB estimates may represent another 3% to 5% of single-family starts based on industry surveys.

The SFBFR market is a source of inventory amid challenges over housing affordability and down payment requirements in the for-sale market, particularly during a period when a growing number of people want more space and a single-family structure.

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