The number of single-family built-for-rent (SFBFR) starts increased by 33% in 2022 compared to 2021, according to an NAHB analysis of the Census Bureau’s Quarterly Starts and Completions by Purpose and Design. During the fourth quarter, the number of SFBFR starts increased 6% to 17,000.
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. Single-family built-for-rent construction differs in terms of structural characteristics compared to other newly-built single-family homes, particularly with respect to home size.
Given the relatively 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 (7%) is nonetheless higher than the historical average of 2.7% (1992-2012) and sets a data series high as this submarket expands.
With the onset of the Great Recession and declines for the homeownership rate, the share of built-for-rent homes increased in the years after the recession. While the market share of SFBFR homes is small, it has clearly been trending higher. As more households seek lower density neighborhoods and single-family residences, a growing number will do so from the perspective of renting. This will be particularly true as mortgage interest rates remain elevated. However, recent price softening may weaken some investor demand for SFBFR housing. Thus, NAHB is forecasting the recent gains in market share will stick as the housing market normalizes in the next two years.
