Faced with a low inventory of for-sale homes, investors are building for-rent single-family homes – a new-home niche up 91% year-to-year in the second quarter.
CHICAGO – Institutional operators are contributing to an explosion of single-family, build-for-rent (SFBFR) construction in the United States. The National Association of Home Builders (NAHB) estimated around 21,000 SFBFR construction starts nationwide during the second quarter of this year, for a 91% year-over-year gain.
“Over the last four quarters (one year), 69,000 such homes began construction, which is a 60% increase compared to the 43,000 estimated SFBFR starts in the prior” year, the association reported. “The SFBFR market is a means to add inventory amid challenges over housing affordability and down-payment requirements in the for-sale market, particularly during a period when a growing number of people want more space and a single-family structure.”
The institutional-supported single-family rental (SFR) industry has continued to grow its presence while facing a sharp decline in the home-purchase market due to rising interest rates.
Meanwhile, institutional SFR players are continuing to purchase existing homes to enlarge their rental-property stock. According to NAHB, the SFBFR boom is happening during a sharp downturn in single-family home construction, “as rising construction costs, elevated mortgage rates, and supply-chain disruptions continue to act as a drag on the market.”
The numbers on such starts are the lowest reading since June 2020, and NAHB chief economist Robert Dietz pointed to a recession, “with builder sentiment falling for eight consecutive months while the pace of single-family home building has declined for the last five months.”
Source: HousingWire (08/31/22) Conroy, Bill
© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688
Go to Source