Single-family starts built-for-rent held steady at 6,000 starts for the third quarter of 2014. While the market share of built-for-rent single-family homes remains somewhat elevated, the share and count of starts are off post-recession highs and will approach historical norms as the housing market continues to recover.
According to data from the Census Bureau’s Quarterly Starts and Completions by Purpose and Design and NAHB analysis, the market share of single-family homes built-for-rent, as measured on a one-year moving average, stands at 3.5% for the third quarter of 2014. This remains higher than the historical average of 2.8% but is down from the 5.8% registered at the start of 2013. It important to note that this class of single-family construction excludes homes that are sold to another party for rental purposes. It only includes homes built and held for rent.
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 22,000 homes started during the last four quarters. It appears the market is returning to historical averages after recent peaks.
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.