Single-Family Built-for-Rent Starts Post Year-Over-Year Gain
As builders sought to add additional rental housing in a market facing ongoing, elevated mortgage interest rates, single-family built-for-rent construction posted year-over-year gains as of the first quarter of 2024.
There were approximately 18,000 single-family built-for-rent (SFBFR) starts during the first quarter of 2024 according to the National Association of Home Builders’ (NAHB) analysis of data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design. The first quarter of 2024 reported 20% higher compared to the first quarter of 2023. 80,000 homes began construction over the last four quarters, which is almost a 16% increase compared to the 69,000 estimated SFBFR starts in the four quarters prior to that period.
According to Eye On Housing, 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 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).
