The number of single-family homes built-for-rent has posted solid gains over the last year. However, the built-for-rent market is a small portion of the total single-family development, so care must be taken when identifying trends.

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, stood at 4.5% of total starts as of the second quarter of 2016. Given the small size of the market segment, the quarter-to-quarter movements are, however, not typically statistically significant. The current market share remains higher than the historical average of 2.8% but is down from the 5.8% reading registered at the start of 2013.

For the last four quarters, single-family built-for-rent starts totaled 34,000 homes. This marks positive growth over the 26,000 estimated for the four quarters prior. 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 rental purposes.

With the onset of the Great Recession and the ongoing declines in the homeownership rate, the share of built-for-rent homes rose. Despite the current elevated market concentration, the total number of single-family starts built-for-rent remains low in terms of the total building market. However, after falling during 2013, the market share has grown over the past year.

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 35% according to the 2013 American Community Survey. As homes age, they are more likely to be rented. Thus, the primary source of single-family rental homes is not construction but the existing housing stock.

To learn more about build-to-rent homes and getting involved in this lucrative segment of real estate investing, contact 9 Core Realty today!