Single-Family Built-For-Rent Construction Posts Year-Over-Year Gain in Q2

According to National Association of Home Builders (NAHB) analysis of the US Census Bureau’s Quarterly Starts and Completion by Purpose and Design data, single-family built-for-rent (SFBFR) construction posted year-over-year gains in Q2, as builders sought to add additional rental housing in a market facing ongoing, elevated mortgage interest rates.

There were approximately 23,000 SFBFR starts during Q2. This is almost 10% higher than 2023Q2. Over the last four quarters, 83,000 such homes began construction, which is a more than 20% increase compared to the 69,000 in the previous four quarters.

NAHB notes that 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. SFBFR 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 projects of built-for-rent homes for their own operation.

Given the relatively small size of this SFBFR 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).