Single-Family Built-for-Rent Production Drops in First Quarter

Production of single-family built-for-rent housing declined in the first quarter of 2021 despite expectations for increased construction. This sector has grown greatly in recent years as a way to combat housing affordability and availability issues, and the demand is poised to grow even more as Americans desire more living space and single-family structures. Compared to the first quarter of 2020, single-family built-for-rent home construction dropped 22%, says the National Association of Home Builders. But because the sector remains relatively small, quarterly movements are not statistically significant, says NAHB.

This was a 22% decline relative to the first quarter 2020 total of 9,000. Over the last four quarters, 42,000 such homes began construction, which is about flat compared to the 41,000 estimated SFBFR starts for the four prior quarters.

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 (4.1%) 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, this class of single-family construction excludes homes that are sold to another party for rental purposes, which NAHB estimates may represent another two percent of single-family starts. The estimates in this post only include homes built and held by the builder for rental purposes. It is possible this share is rising, and we will have future survey results to explore it.

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