Despite some recent ups and downs, the share of single-family homes built for rental purposes remains higher than historical norms.
According to data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design, the market share of single-family homes built for rent, as measured on a one-year moving average, stands at 5.1% for the third quarter of 2012. This is only slightly lower than the recent peak of 5.35% set at the beginning of 2011, and is considerably higher than the 20-year average of 2.7%.
In general, with the onset of the Great Recession, the share of built-for-rent homes rose, with a dip in the share during the homebuyer tax credit period.
Despite the elevated market share, the total number of single-family starts built for rental purposes remains fairly low – only 27,000 homes started over the past year, but this total has been increasing with the overall growth for housing starts.
Of course, the built-for-rent share of single-family homes is considerably smaller than the single-family home portion of the rental housing stock, which is 27% according to the 2010 American Community Survey. The reason for this is that as single-family homes age, they are more likely to transition from the owner-occupied to the rental housing stock.