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Single-Family Built-for-Rent Market Higher than Historical Average, but Still Below Peak

HomeThe number of single-family homes built-for-rent experienced a 50 percent year-over-year decline in Q1 2015, from 4,000 starts in the same quarter a year earlier down to 2,000 starts, according to data released recently by the National Association of Home Builders (NAHB).

The Q1 market share for single-family build-for-rent homes stood at 3.5 percent of all single-family starts during the quarter, which is higher than the historical norm (2.8 percent) but lower than the peak of 5.8 percent in early 2013. The market share is measured on a one-year moving average using NAHB analysis and the Census Bureau’s Quarterly Starts and Completions by Purpose and Design. Since estimates for the market are small, there are rarely any significant statistical changes from one quarter to the next.

The market share for built-for-rent homes increased following the financial crisis of 2008, despite a share higher than the historical average in Q1, the total numbers overall are low. This particular measure includes only single-family homes that are built and rented out; it does not include homes that are sold to another party to rent.

"Despite the elevated market concentration, the total number of single-family starts built-for-rent remains fairly low – only 23,000 homes started during the last four quarters," said Robert Dietz, economist for the NAHB, on the Eye on Housing blog. "It appears the market is returning to historical averages after recent peaks."

Dietz said according to a 2011 American Consumer Survey, the single-family home share of rental housing stock was 29 percent, considerably larger than the built-for-rent share of single-family homes – because single-family homes often transition to rental housing stock as they get older.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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