Single-family starts built-for-rent were down sharply on a year-over-year basis, falling to only 6,000 starts for the final quarter of 2013 compared to 9,000 a year prior, which was near the highest quarterly tally since 2003. While the market share of built-for-rent single-family units remains elevated, the share and count of starts appear to be declining off post-Great Recession highs.
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 3.3% for the fourth quarter of 2013. This remains significantly higher than the historical average of 2.8%, but is down from the 4% registered in the third quarter.
With the onset of the Great Recession, the share of built-for-rent homes rose, with a dip in the percentage during the homebuyer tax credit period.
Despite the elevated market concentration, the total number of single-family starts built-for-rent remains fairly low – only 20,000 homes started during the last four quarters. It appears the market is returning to historical averages after peaks in this form of construction during the second half of 2012.
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 29% according to the 2011 American Community Survey. The reason for this is that as single-family homes age, they often transition to the rental housing stock.