Single-family homes built for the rental market jumped 35% to an all-time high last year

• Single-family homes built for the rental market reached a record high in 2022, the National Association of Realtors said.
• Construction in the emerging housing category jumped 35% to 81,000 units last year.

Construction of new single-family homes for the rental market reached a record high last year, the National Association of Realtors reported on Wednesday.

Such built-for-rent (BFR) housing starts jumped 35% to 81,000 units in 2022, NAR said, citing data from the Census Bureau. Meanwhile, their share of overall housing starts rose to 8% last year from 5% in 2021.

Both metrics are at their highest since data collection began in 1974. BFR properties, constructed for tenant use, are meant to offer renters an option that is more spacious than an apartment.

Growth in this emerging sector of the housing market comes as the inventory of existing homes remains tight, leaving prospective buyers to look to new homes.

"Just as many homeowners have felt the need for more space throughout the pandemic, the same is true for some renters. With this concept, a yard for a pet, a home office, and room for a new baby becomes more within reach," NAR deputy chief economist Jessica Lautz wrote.

BFR's share of overall housing starts grew in each region, led by the Midwest, which saw the share swell to 12% from 5%, NAR reported.

BFRs are an alternative for millennials and first-time buyers looking to reside in a home, as many have been unable to achieve homeownership amid low affordability. According to NAR, first-time buyers fell to 26% of the buyer market, compared to a 40% historic norm.

"BFR homes may be their solution—albeit temporary, as they save for their first home down payment," Lautz said.