Single-Family Built-For-Rent Starts Expand 20% Year-Over-Year in Q1

Recent data provided by the US Census Bureau in its Quarterly Starts and Completions by Purpose and Design, with further analysis provided by the National Association of Home Builders (NAHB), reveals that there were approximately 18,000 single-family built-for-rent (SFBFR) starts during Q1. This is 20% higher than 2023Q1, albeit with favorable comps due to a weak start of 2023.

Over the last four quarters, 80,000 such homes began construction, which is almost a 16% increase compared to the 69,000 estimated SFBFR starts in the four quarters prior to that period.

NAHB points out that 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. 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. 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, NAHB said. The current four-quarter moving average of market share, which is 8%, is nonetheless higher than the historical average of 2.7% for the 10-year period between 1992–2012.

Importantly, as measured for this analysis, the estimates noted above 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 3–5% of single-family starts based on industry surveys.