Single-family rentals (SFR) have become the fastest-growing segment of the U.S. rental market, driven in part by high demand among millennials faced with a persistently challenging homeownership market. Rather than owning, many apartment renters are choosing house renting as an intermediate rung, according to a Point2Homes analysis of recent Yardi Matrix data.
Six in 10 new house renters are coming from apartments, pushing the share of renters who opt for SFRs to a five-year high, the analysis found. The number of completed SFRs in build-to-rent (BTR) communities has increased more than tenfold, from 3,800 units in 2015 to 39,000 new deliveries in 2024. Just three years ago, only three in 10 new house renters came from an apartment, according to the report.
In addition, three-bedroom homes have overtaken two-bedroom ones, encompassing 53% of SFR BTR completions so far this year. This trend emphasizes a growing demand for space and comfort, Point2Homes said.
“Young people starting families, as well as professionals of all ages are increasingly let down by the crammed apartment life and the noisy hustle and bustle of busy urban hubs,” said the report. “As such, they’re becoming more and more attracted to the suburbs that promise more space, more privacy and better lifestyle opportunities.”
Remote work has accelerated housing demand in suburbs and exurbs, said the report, noting more than two-thirds of employers offer some work location flexibility. The need for work-from-home space is one factor driving the growing preference for larger home rentals.
Young renters aren’t the only demographic turning to SFRs, the analysis said. Eight percent of new house renters are previous homeowners, which could indicate SFRs are an increasingly viable option for families and empty-nesters who are relocating for work or to be closer to loved ones, said Point2Homes.
The challenging homeownership market is playing into this dynamic, with the average rent of $1,776 substantially more affordable than the average monthly mortgage payment of $2,504. In several markets, renting is much more economical than purchasing a home, especially in San Francisco, San Diego, Seattle and Los Angeles, the report said.
However, SFR occupancy has remained high across the country, with 94.7% of these units currently occupied, making it difficult for renters to find availability in some markets. Occupancy is lower in markets like Jacksonville, Florida; Charleston, North Carolina; Austin; Dallas; San Antonio; and Phoenix.
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