Single-Family Built-for-Rent Projects Continue to Increase
As demand for single-family homes continues but affordability challenges emerge, developers and builders are increasing construction for single-family built-for-rent projects. An analysis of the Census Bureau’s Quarterly Starts and Completions by Purpose and Design by the National Association of Home Builders found there were 10,000 single-family built-for-rent starts during the second quarter of 2021. For the past four quarters, that’s a total of 42,000 starts for this sector, an 8% increase compared to the prior four quarters. Built-for-rent projects are one way to add inventory as demand outpaces supply in the for-sale market.
Given the 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 (3.7%) remains higher than the historical average of 2.7% (1992-2012) but is down from the 5.8% reading registered at the start of 2013.
Importantly, as measured for this analysis, the estimates noted above only include homes built and held by the builder for rental purposes. Those estimates exclude homes that are sold to another party for rental purposes, which NAHB estimates may represent another two or three percent of single-family starts. Indeed, the Census data notes a notable jump in single-family homes built as condos (non-fee simple) in the second quarter, with this share standing at 5.3%. Many of these homes will be used for rental purposes.