Single-family rental home construction saw year-over-year increases beginning in the second quarter of 2024 as builders sought to add additional rental housing in a market facing persistently high mortgage rates.
According to NAHB’s analysis of data from the Census Bureau’s quarterly housing starts and completions by purpose and design, there were about 23,000 single-family built-for-rent (SFBFR) housing starts in the second quarter of 2024, up nearly 10% from the second quarter of 2023. Construction on 83,000 such homes began in the last four quarters, an increase of more than 20% from the 69,000 estimated SFBFR starts in the four quarters prior to this period.
Given the relatively small size of this market segment, quarter-to-quarter fluctuations are generally not statistically significant. However, the current moving average market share over the last four quarters (8%) is higher than the historical average of 2.7% (1992-2012).
Importantly, the estimates provided for this analysis include only homes built and held by the developer for rental purposes. The estimates exclude homes sold to another party for rental purposes. Based on industry surveys, NAHB estimates that these could represent an additional 3% to 5% of single-family home construction projects.
The SFBFR market is a source of inventory amid housing affordability challenges and down payment requirements in the sales market, especially at a time when more people are wanting more space and a single-family home.
Dr. Robert Dietz, chief economist at NAHB, provides further details in this Eye on Housing article.
