The National Association of Home Builders says a rising number of single-family homes are being constructed for the rental market, according to its chief economist Robert Dietz.
Dietz said in a blog post that although most new homes are still built for the home purchase market, the number of properties “built-to-rent” is rising rapidly as developers seek to fill a gap in the market.
The NAHB said there were 37,000 construction starts of single-family built-for-rent homes in the last four quarters, up from 33,000 in the prior four quarters. On a one-year moving average basis that means the built-for-rent market accounts for 4.3 percent of all single-family home starts in the first quarter of this year. In total there were 7,000 new home starts in this category, which excludes homes sold to a third-party for rental purposes.
Dietz wrote that the Great Recession of last decade, coupled with a decline in homeownership, has spurred more interest among developers in build-to-rent homes. However, he said that although the current market concentration of such homes is elevated, “the total number of single-family starts built-for-rent remains low in terms of the total size of the building market.”
From 2005 to 2015, 56 percent of the gains in the rental housing stock were due to increases of for-rent single-family homes. The share of single-family homes built specifically for renting out is significantly smaller than the single-family home portion of the rental housing stock, which was measured most recently at 35 percent by the 2015 American Community Survey.
“As homes age, they are more likely to be rented,” Dietz said.