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September 2017

Slowdown reported for single family homes built as rentals

Census Bureau data suggest the number of single-family homes built-for-rent appears to be slowing. A comparison of the last four quarters shows production of this type of housing totaled 28,000 homes. That's down from 35,000 when compared to the prior four quarters.

Analysis of the data by the National Association of Homebuilders indicates the market share of single family homes built-for-rent, as measured on a one-year moving average, stood at 3.5 percent of total starts for the second quarter of 2017. This class of single-family construction includes homes built and held for rental purposes, but excludes homes that are sold to another party for rental purposes.

"Given the small size of the market segment, the quarter-to-quarter movements are not typically statistically significant, "the NAHB said in its "Eye on Housing" report. The segment is down from the 5.8 percent reported at the start of 2013.

The built-for-rent share of single family homes is considerably smaller than the single-family portion of the rental housing stock, which is 35 percent, according to the 2015 American Community Survey. As homes age, they are more likely to be rented so the primary source of single family rental homes is the existing housing stock, rather than new construction, the ACS explained. The Survey showed that 56 percent of the gains in the rental housing stock from 2005 to 2015 were due to single-family homes.