Annual Build-to-Rent Starts Hit Another High in Q3 2024
- SFR/BTR housing starts totaled 92,000 units over the year ending in the third quarter of 2024 — an all-time high.
- BTR accounted for 9.0% of all single-family housing starts, reaching a new record.
- Lifestyle preferences and financial barriers to homeownership have reinforced the demand profile of single-family rentals.
As more single-family rental (SFR) operators rely on build-to-rent (BTR) development to supply new inventory, construction starts have steadily risen, reaching another record high in the third quarter of 2024. SFR/BTR construction has eclipsed 92,000 units in the last four quarters — an all-time high and an annual increase of 31.4% (Chart 1).
Banner Year for SFR Development
SFR development is having a banner year, as the upcoming Arbor Single-Family Rental Investment Trends Report will detail more fully. Between July and September, 24,000 BTR units began construction — marking just the fifth time the quarterly total exceeded 20,000 and the first time BTR starts crossed this threshold in consecutive quarters. Thus far in 2024, 68,000 BTR units have already begun construction. If 10,000 or more construction starts begin in the fourth quarter, 2024 will become BTR development’s most active year in history.
Beyond unit totals, the BTR share of all single-family construction has also reached an all-time high, climbing to 9.0% through the third quarter of 2024 (Chart 2). BTR’s growing share of single-family construction represents a significant change from the past for residential development. Before the 2008 financial crisis, the BTR share of single-family construction never eclipsed 3.1%.
Among the driving factors contributing to SFR/BTR’s rise, persistent homeownership affordability constraints remain front and center. According to data from the Federal Reserve Bank of Atlanta, buying a home is 33% less affordable today than in 2020, as mortgage rates have rebounded and home prices continue to reach record highs. New research from Point2 highlights how SFRs are filling a pressing need in the housing market, offering renters sought-after amenities like yards, multiple bedrooms, and washer/dryers. Moreover, single-family rental homes are gaining popularity as renters recognize they may provide affordable access points to quality public education.
Outlook
As more developers and renters discover the benefits of single-family rental homes, BTR will likely continue to expand its share of all single-family starts and new construction will continue its record-breaking ascent.
Interested in the multifamily real estate investment market? Contact Arbor today to learn about our array of multifamily, single-family rental, and affordable housing financing options or view our multifamily articles and research reports.