Roughly 90,000 build-to-rent (BTR) units are under construction across the country, including properties in lease-up that have construction ongoing, according to a third-quarter analysis published by RealPage.
The Sun Belt leads the nation in BTR construction, with nearly 57,000 units under way, which is more than double the 23,115 BTR units under construction in the West. The category is highly concentrated in Texas, Arizona, Florida, Georgia and North Carolina, which reinforces the need for ample space to build out single-family style homes with community amenities.
The Midwest has nearly 8,000 BTR units under construction, while the Northeast has about 1,800 under way, RealPage said.
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The BTR market is bolstered by a challenging home ownership market, driven by uncertain mortgage rates and tight for-rent and for-sale housing inventory. The category includes single-family housing that is fully detached, semi-detached, row houses, duplexes, quadruplexes and townhouses built specifically for rental. The BTR space is a viable option for both developers and renters as barriers to single-family home ownership continue, especially for first-time buyers. The weekly average 30-year rate was around 6.69% in early December, which compares with rates that ranged between 6% and 8% over the past two years. That is significantly higher than the 10-year average rate of 4.47%, said RealPage. In addition, persistent inflation despite Federal Reserve Board rate cuts as well as the potential for tariffs under the Trump administration could pose continued headwinds for home buyers.
“Persistent housing demand remains a proving ground for BTR with a resilient U.S. economy, real gross domestic product (GDP) at an annual rate of 2.8% as of 3rd quarter 2024 partnered with a still solid – though slowing – job market and consumer spending,” said the analysis.
The BTR sector has a long runway, with RealPage tracking 10,000 planned BTR units across the country.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
