As the housing market grapples with elevated mortgage interest rates, builders are increasingly turning to single-family built-for-rent (SFBFR) homes to meet rising demand for rental properties. According to data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design, analyzed by the National Association of Home Builders (NAHB), approximately 23,000 SFBFR homes were started in the second quarter of 2024. This represents a nearly 10% increase from the same period in 2023, highlighting the growing interest in this niche market.
Over the last four quarters, SFBFR starts totaled 83,000 homes, a significant rise of over 20% compared to the 69,000 homes started in the previous four quarters. The market share for these types of homes, currently averaging 8%, has increased substantially from the historical average of 2.7% between 1992 and 2012. Although the SFBFR market remains relatively small, this growth is notable as builders focus on providing inventory to renters during a period marked by high homeownership costs.
It’s important to note that the data only accounts for homes built and held by builders for rental purposes, excluding homes sold to other parties for renting. NAHB estimates suggest that such sales may account for an additional 3% to 5% of single-family starts.
SFBFR homes are becoming a key solution for prospective renters seeking single-family living arrangements, particularly as home affordability remains a challenge for many buyers due to rising interest rates and larger down payment requirements. This trend highlights how the rental market is evolving to accommodate growing demand for more spacious, family-oriented housing in suburban environments.
