Dive Brief:
- More than 25,000 single-family rental units are under construction in the U.S., according to Yardi Matrix’s SFR database of developments with 50 or more units.
- Deliveries are up as well. In the first half of 2022, nearly 4,300 units were delivered. This year should far surpass 2021’s record high of 7,705 deliveries, according to a report from Yardi Matrix.
- Almost two-thirds of SFRs under construction in projects with 50-plus units are in secondary markets. At the same time, only 626 units under construction in 50-plus-unit developments are being built in gateway markets, which have higher labor and construction costs, according to Yardi Matrix. The West (6,500 units), Southeast (5,070) and Southwest (4,200) had the highest number of homes under construction in 50-plus-unit developments.
Dive Insight:
Demand for SFRs won’t subside anytime soon, according to Yardi Matrix report author Paul Fiorilla. “Given the long-term shortage of single-family homes and the high cost of homeownership, SFR occupancy rates are projected to remain high into the future,” Fiorilla wrote.
SFRs have recorded year-over-year increases in the double digits every month since the second quarter of 2021, according to Yardi Matrix. Additionally, SFR rents hit an all-time high of $2,071 in June 2022, up from $1,646 in March 2020.
Metros with the most units under construction
| Market | 50+ community units |
| Phoenix | 5,254 |
| Dallas | 2,234 |
| Charlotte | 1,426 |
| Houston | 1,050 |
| Tampa | 989 |
SOURCE: Yardi Matrix
But as rents have risen, occupancies have tightened. SFR occupancies — now higher than those in multifamily — have been at or above 96.9% every month since late 2020, according to Yardi Matrix.
Many residents prefer the amenities and convenience of a new home, driving the record-high starts numbers. “I think there is a lot of demand in good locations for a brand-new rental-home community,” John Burns, CEO of John Burns Real Estate Consulting, told Multifamily Dive in an interview earlier this year.
But some of those developments could be so far away from metro areas that they could eventually face supply challenges.
“There is so much capital coming in right now,” Burns said. “I'm seeing it fly out to the tertiary locations, which will probably get overbuilt.”
Still, Burns likes the overall fundamentals in the sector: “There are almost 15 million people that rent single-family homes, including condos,” Burns said. “A huge percentage of them would love to rent a new home in a community managed by a professional company.”
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