Construction of Rental Homes on the Rise
Developers completed 39% more new rental homes in 2023 than in 2022. High prices and rates are keeping owners on the sidelines.
MIAMI – John Burns Research and Consulting (JBRC) reports that 93,000 new single-family homes for rent were completed last year, the most in any other year and up 39% from the number of rental homes completed in 2022.
The number of rental homes being constructed is expected to continue at a rapid pace through 2024 before easing in 2025, as developers look to capitalize on higher home prices and mortgage rates.
Rental homes range in size from one-bedroom cottages to five-bedroom homes with large backyards and also include townhomes and detached houses. New rental homes are popping up in Florida cities and other areas with fast population and job growth.
JBRC says that rent growth may have slowed from its double-digit percentage increases for apartments, but rents for houses are higher where occupancy has been more resilient given the higher sustained demand for single-family rentals.
Another 99,000 new rental homes are under construction this year, but analysts and builders say that some homes in the planning stages may not be built due to tighter lending conditions and lenders that are scaling back.
Heitman executive Brian Pieracci said, "We expect a growing number of older millennials and retirees to rent as median home prices have grown at twice the pace of median incomes since 2000."
Source: Wall Street Journal (05/14/24) Parker, Will
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