Build-to-rent housing starts have more than doubled over the past decade as a proportion of all single-family construction, with developers looking to meet more demand fueled by elevated mortgage rates and a dearth of for-sale inventory making property less affordable for would-be buyers.
According to a National Association of Home Builders’ analysis of U.S. Census Bureau’s data, roughly 18,000 single-family, build-for-rent units began construction in the first quarter, a 20% increase from the same time in 2023.
Over the past four quarters ended in March, construction began on 80,000 build-to-rent houses, a near 16% increase from the prior four-quarter period that had 69,000 build-to-rent starts. This growth has more than doubled the share of build-to-rent houses relative to all single-family construction in 2014 — from just 4,000 starts and a 3.29% share in the first quarter of that year to the roughly 8% share registered in each of the past four quarters.
When it comes to single-family, build-to-rent property, “while the market share of homes is small, it has clearly expanded,” Robert Dietz, chief economist at NAHB, said in the analysis. “Given affordability challenges in the for-sale market, the [single-family build-to-rent] market will likely retain an elevated market share.”
To be clear, NAHB noted that higher-for-longer interest rates have softened demand among investors in recent months. As a result, build-to-rent’s rolling one-year share of all single-family starts dropped from 7.96% in the final quarter of 2023 — an all-time high — to its current 7.84% share. Total starts also declined quarter over quarter by roughly 4,000 units.
Still, Dietz said data from the Census Bureau on build-to-rent starts includes only houses constructed and held by the builder for rental purposes, while those sold to another party for rental purposes are excluded. NAHB estimates those projects may account for an additional 3% to 5% of all single-family starts.