Economists' Outlook

Housing stats and analysis from NAR's research experts.

Built-for-Rent Housing Starts Continue to Increase

There is no question that the housing market is in a gridlock, with homeowners unable or unwilling to move due to low-interest rate mortgages. The need for new construction is one solution to this problem, which could alleviate the housing inventory crisis. At the same time, there is a shortage of inventory, and home prices have jumped, even in a high-interest rate environment, making the dream of homeownership completely out of reach for many. First-time buyers are now in their mid-to-late 30s when they purchase their first property. To reach homeownership, first-time buyers have higher incomes and are wealthier. So, what happens to those who cannot reach homeownership today? Home builders have seen this data and seen, in turn, an opportunity: built-for-rent.

Built-for-rent is the concept of new single-family home construction for the intent of renting. While there has been growth in new home sales and construction activity, multifamily home construction has also grown in recent years. However, an apartment may not have enough square footage for some renters. With this concept, a yard for a pet, space for a home office, and room for a new baby becomes more accessible. Renting a single-family home in a new housing community may also come with amenities not seen in the typical apartment, such as walking paths, pickleball courts, or even shared gardens.

Calculating data from the U.S. Census Bureau's Survey of Construction Data shows that the one-year growth in built-for-rent single-family housing starts grew to 90,000 units in 2023 (from 81,000 units in 2022).

Bar graph: Built-for-rent Single-family Housing Starts, 1974 to 2023

However, while the number of units rose, the share of all housing starts is significant to watch. The share of built-for-rent single-family homes grew from 5% in 2021 to 10% in 2023, thus doubling in two years. Both the share of homes and the number are the largest numbers collected since 1974 for this segment of the market.

Line graph: Share of Built-for-rent Among All Single-family Housing Starts, 1974 to 2023

All regions saw an annual increase in built-for-rent. When looking at the data by region, there was a notable two-year growth in built-for-rent single-family homes in the Midwest, where it is now 13% of the market, up from 5% in 2021. The Northeast also saw a two-year rise from 3% to 9%. The increase in the South was smaller, at 9%. The West has the smallest share, at 8%.

Line graph: Regional Share of Built-for-rent Among All Single-family Housing Starts, 1999 to 2023

So, will the market for this type of construction continue to increase? Perhaps if home buying continues to be out of reach for young adults. They will need a bigger space if they have growing families or even just a yard for a dog to play in. Built-for-rent may be their solution—even if temporary—as they save for their down payment for their first home.