According to an NAHB analysis of Census Bureau data, the number of single-family build-to-rent (SFBTR) construction starts reached its highest quarterly volume on record during the third quarter. Over the past four quarters, 47,000 such homes began construction, which represents a 17.5% gain compared with the 40,000 estimated SFBTR starts for the four prior quarters.
The SFBTR market is a way to add inventory amid concerns 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 build-to-rent construction differs in terms of structural characteristics compared to other newly built single-family homes, particularly with respect to home size.
Importantly, as measured for this analysis, the estimates only include homes built and held by the builder for rental purposes. The estimates exclude homes that are sold to another party for rental purposes, which NAHB estimates may represent another 3% to 4% of single-family starts. Indeed, the Census data notes an elevated share of single-family homes built as condos (non-fee simple) in the third quarter, with this share standing at 3.6%. Many of these homes will be used for rental purposes.
With the onset of the Great Recession and declines in the homeownership rate, the share of build-to-rent homes increased in the years after the recession. While the market share of SFBTR homes is small, it has been trending higher.
