Single-Family Built-for-Rent Construction Sees Significant Growth in Early 2024
Single-family built-for-rent (SFBFR) construction saw substantial year-over-year gains in the first quarter of 2024, as builders aimed to increase rental housing options in a market burdened by high mortgage interest rates.
According to the National Association of Home Builders (NAHB), which analyzed data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design, there were approximately 18,000 SFBFR starts in the first quarter of 2024. This figure represents a 20% increase compared to the first quarter of 2023, though it’s worth noting that the comparison benefits from a particularly weak start in 2023. Over the past four quarters, 80,000 such homes began construction, marking a nearly 16% rise from the 69,000 SFBFR starts in the previous four quarters.
The SFBFR market provides much-needed inventory amid ongoing challenges related to housing affordability and down payment requirements in the for-sale market. This is particularly relevant as more people seek additional space and prefer single-family structures. SFBFR homes often have different structural characteristics compared to other newly built single-family homes, especially regarding size.
Despite a cooling investor demand for both existing and new single-family homes due to higher interest rates, builders continue to pursue smaller SFBFR projects for their own operations. Given the affordability issues in the for-sale market, the SFBFR sector is expected to maintain a significant market share, even if the sector experiences some cooling in the upcoming quarters.
