Single-Family Built-For-Rent Construction Market Cools as Investors React to Tighter Financial Conditions

According to the US Census Bureau’s latest Quarterly Starts and Completions by Purpose and Design report, with additional analysis provided by the National Association of Home Builders (NAHB), single-family built-for-rent construction (SFBFR) has cooled as investor interest has pulled back on tighter financial conditions.

In 2023Q2, there were approximately 20,000 SFBFR starts. When compared to 2022Q2, this is a decline of 4%. Over the last four quarters, 68,000 SFBFR homes began construction, which is more than a 1% decline when compared to the 69,000 SFBFR starts in the four quarters prior to that period.

NAHB notes that the SFBFR market is a source of inventory amid challenges over housing affordability and downpayment requirements in the for-sale market, particular during a period when a growing number of people want more space and a single-family structure. SFBFR 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.

NAHB points out that since the onset of the Great Recession and declines in the homeownership rate, the share of SFBFR homes increased in the years after the recession. While the market share of SFBFR homes is limited, it has clearly expanded. Given affordability challenges in the for-sale market, the SFBFT market will likely retain an elevated market share as the sector cools.