The popularity of new homes built for the purpose of renting is peaking. Two drivers behind this boom are the rise of remote work and millennials reaching prime homebuying age while facing challenges in purchasing property.
But which areas have contributed the most to this growth? To answer this question, and to map out the future of this niche market, RentCafe.com analyzed Yardi Matrix data on single-family homes for rent in professionally managed communities.
In 2023, a record-breaking 27,500 build-to-rent homes opened their doors, up 75% compared to the year prior. Lifestyle changes in the aftermath of the COVID-19 pandemic led to new peaks each year, culminating this past year.
This relatively new real estate sector is attracting strong interest from both institutional investors and established builders, leading to an unprecedented growth streak, especially in the last five years. In fact, 41% of all build-to-rent homes (about 68,000 rental homes) in the country were built between 2019 and 2023.
14 U.S. METROS REACHED 10-YEAR HIGHS FOR BUILD-TO-RENT CONSTRUCTION IN 2023
Overall, 2023 was a banner year for single-family rental deliveries, exceeding all expectations. In fact, 14 of the top 20 metros for build-to-rent completions marked 10-year highs, with Phoenix emerging as the nation’s hot spot for newly built homes for rent. The metro alone added more than 4,000 units in 2023, its highest achievement in the last decade and far more than the 2,700 rental homes Dallas added that same year.
Next up is Atlanta with just under 2,000 single-family homes for rent delivered last year, another 10-year high. Austin, Texas, and Charlotte, North Carolina, round out our top five with 840 and 714 new homes for rent, respectively.
Las Vegas, Houston and Salt Lake City also made our top 20 metros for build-to-rent completions in 2023 after expanding their inventories by hundreds of single-family homes for rent.
PHOENIX LEADS METROS FOR BUILD-TO-RENT HOMES COMPLETED BETWEEN 2019 AND 2023
Sunbelt metro areas dominate the build-to-rent construction market. Specifically, Phoenix, Dallas and Atlanta are the top three metros for new single-family homes for rent built in the last five years. Phoenix sets itself apart from the rest with more than 9,300 units completed between 2019 and 2023. The metro also has the vastest portfolio of build-to-rent houses in the nation — close to 12,400 units. Runner-up Dallas counts a little more than 6,500 new rental homes built in the last five years, almost double the number of deliveries in Atlanta, third on our list — roughly 3,500 build-to-rent houses.
Other Texas locations among the top 20 metros for new single-family homes for rent are Houston (2,402 units), Austin (1,720 units) and San Antonio (1,299 units). The string of sunny destinations that have a significant build-to-rent market also includes California’s Riverside with 1,011 homes for rent that opened between 2019 and 2023.
The Midwest is also well-represented in our ranking. Zooming in, Detroit is a leader in the region, ranking fifth nationwide with more than 2,110 new build-to-rent homes. Columbus, Ohio, is just three spots behind Motor City, having completed 1,470 houses for rent in the last five years. Kansas City, Missouri, and Indianapolis also made significant strides in the build-to-rent niche, delivering nearly 1,080 units and 780 units, respectively.
TEXAS HAS MOST SINGLE-FAMILY RENTALS UNDER CONSTRUCTION
Increased rental demand driven by the appeal of a private backyard and fewer commitments compared to homeownership, as well as interest from well-established investors have been the wind in the sails of build-to-rent construction. More than 45,000 rental homes are under construction, setting another record for the industry.
Remarkably, more than half of these upcoming homes for rent are concentrated in five metros: Phoenix (over 7,200 units); Dallas (nearly 6,500 units); Houston (more than 4,800 units); Huntsville, Alabama (about 2,500 units); and Charlotte, North Carolina (2,426 units).
The construction of single-family homes for rent is notably strong in Florida as well. Four metros in the Sunshine State are listed among the top 20 locations in the nation with most build-to-rent units under construction. The state’s most populous city, Jacksonville (ranking ninth in the country), leads the way with 1,836 houses for rent now underway, followed by Tampa (1,350 units), Orlando (close to 1,150 units) and North Port (more than 990 units).
On the West Coast, California’s Riverside continues to consolidate its status as one of the most active build-to-rent markets in the nation, counting roughly 950 single-family homes for rent under construction. Meanwhile, Sacramento ranks 19th nationwide, right after Riverside, gearing up to add 880 houses for rent in the next couple of years.
Clearly, the build-to-rent niche boomed after the pandemic. The growing demand for more space and privacy, coupled with changes in lifestyle, led to an increase in the average number of homes for rent completed annually — from 6,600 in the years before the pandemic to tens of thousands of new units thereafter. This year is expected to be another strong year for this niche.
For more insights and a detailed methodology, read the full report on RentCafe.com.
