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The onset of the Great Recession and a decline in homeownership rates saw the share of build-to-rent homes increase during subsequent years. Rental housing production was strong during 2022's second quarter, and then single-family build-to-rent (SFB2R) construction leveled off in Q3 2022 in step with an overall slowdown in the housing market.
According to the National Association of Home Builders’ (NAHB) analysis of U.S. Census Bureau data, there were approximately 16,000 SFB2R starts during Q3 2022, a 6% drop from Q3 2021. However, over the last four quarters, construction was started on 68,000 SFB2R homes, a 42% increase over the 48,000 estimated SFB2R starts in the prior four quarters, NAHB's Eye on Housing reports. (NAHB also notes that these calculations exclude homes sold to another party for rental purposes; these may represent another 5% or higher of single-family starts based on industry surveys.)
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 (6%) is nonetheless higher than the historical average of 2.7% (1992-2012) and sets a data series high as this submarket expands.
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