The housing market is at a standstill, with homeowners reluctant to move due to low-interest rate mortgages. New construction offers a solution to this crisis, but inventory shortages and soaring home prices make homeownership unattainable for many. Enter the rising trend of “built-for-rent” homes—a concept that’s gaining traction.

What Is Built-for-Rent?

Built-for-rent refers to constructing single-family homes specifically for renting purposes. While multifamily housing has seen growth, apartments often lack the space renters desire. These new single-family homes offer yards for pets, home offices, and room for growing families. Plus, they come with amenities like walking paths and pickleball courts.

The Numbers Speak

Data from the U.S. Census Bureau’s Survey of Construction reveals that built-for-rent single-family housing starts surged to 90,000 units in 2023 (up from 81,000 in 2022). But it’s not just about quantity—the share of built-for-rent homes doubled from 5% in 2021 to 10% in 2023, the highest since 1974.

Regional Trends

Across all regions, built-for-rent homes are on the rise. Notably, the Midwest saw a two-year jump from 5% to 13%, while the Northeast rose from 3% to 9%. The South and West also experienced growth, albeit at smaller rates.

The Future of Built-for-Rent

As young adults struggle with homeownership, built-for-rent homes offer a temporary solution. Whether it’s a growing family or a dog needing space to play, these homes provide an alternative while saving for that elusive down payment.

Sources:
(1) Built-for-Rent Housing Starts Continue to Increase. https://www.nar.realtor/blogs/economists-outlook/built-for-rent-housing-starts-continue-to-increase.
(2) Single-Family Built-for-Rent Growth Strong in 2022 – Eye on Housing. https://eyeonhousing.org/2023/02/single-family-built-for-rent-growth-strong-in-2022/.
(3) Strong Quarter for Single-Family Built-for-Rent Construction. https://eyeonhousing.org/2024/02/strong-quarter-for-single-family-built-for-rent-construction/.