New homes built for the purpose of renting are surging, riding high on the shoulders of hybrid workers and millennials who are approaching their prime nesting years but also finding homebuying difficult. This is according to a new study from RentCafe.
In 2023, approximately 27,500 build-to-rent homes were finished, a record number. Furthermore, this was 75% higher than the previous year and expected to triple by 2021. Of course, the allure of living in a house with a private backyard (although a small one in many cases) became even more appealing during the pandemic. As a result, the number of single-family homes for rent created each year increased from an average of 6,600 in the pre-pandemic years to tens of thousands of new units per year thereafter.
This momentum has resulted in over 45,400 build-to-rent homes currently under development, with renters set to move in over the next few years. While the majority of these will open their doors in 2025, we predict a slowing of this fast-paced construction boom.
So, which places are experiencing the highest amount of new build-to-rent homes? The Phoenix metro area led the way, with over 4,000 units finished in 2023, followed by Dallas and Atlanta. Austin, Texas, and Charlotte, North Carolina, rounded out the top five metro regions with the most properties for rent that launched last year.
Build-to-Rent Boom: Some 14 of 20 Top Metros Achieved 10-Year Highs
After 2022 was a record year for build-to-rent development, 2023 outperformed expectations with about 27,500 rental homes finished across the country. Furthermore, more than half of these residences are in the top 20 metros with the most units added last year, some 14 of which set 10-year records.
Phoenix is the ruling metro, with 4,030 single-family houses for rent opening their doors in 2023, a 10-year record and an astonishing 164% increase over 2022. Granted, Phoenix has the advantage of being able to build out rather than up (as is the case in major coastal areas), thus the desert metropolis continues to capitalize on the popularity of build-to-rent homes. In addition, the area is one of the fastest expanding in the country in terms of population, which helps new communities fill up before they officially open.
Dallas followed with over 2,700 rental homes completed in 2023, a minor reduction from the previous year but still the second-best year for build-to-rent construction in a decade. For context, Texas was the leading state for build-to-rent development in 2023, with approximately 4,800 rental homes completed. The Dallas metro area accounted for more than half of these units.
The Atlanta metro then ranked third in the top 20 with about 2,000 single-family houses for rent finished in 2023, marking another 10-year record. The build-to-rent development trend has exploded in the previous five years here, as it has in the majority of the top 20 metros. This resulted in more than 3,500 single-family rental homes being developed between 2019 and 2023, compared to only 217 between 2014 and 2018.
Austin and Charlotte followed, with 840 and 714 houses for rent added in 2023, respectively. While the Texas metro experienced a 159% increase in new units from 2022, the North Carolina renter hotspot saw a 13% increase during the same period.
The Midwest was also well represented on our list, thanks to Kansas City, Missouri; Columbus, Ohio; Akron, Ohio, and Indianapolis. The Kansas City metro ranks seventh on the list, and it merits special attention for increasing its build-to-rent activity and opening 636 new units in 2023—a significant increase from the 80 dwellings completed here in 2022.
The top five states for build-to-rent activity in 2023 were Texas (4,800 units), Arizona (4,000 units), Florida (2,800 units), Georgia (2,181 units), and South Carolina (1,909 units).
Newest Build-to-Rent Homes are Available in Texas, Florida and California
In addition to privacy and extra room, renters are drawn to single-family homes for rent because they are new and have modern conveniences. In fact, 41% of all build-to-rent residences were completed during the last five years. That amounts to approximately 68,000 rental homes.
Phoenix remained at the top of the list of metros with the most new houses for rent created in the last five years, with almost 9,300 units. Specifically, the Valley managed to triple its supply between 2019 and 2023. This time period saw the addition of over 80% of Phoenix’s total number of rental homes.
Texas featured four metros in the top 20, with Dallas at number two and more than 6,500 single-family houses for rent developed in the last five years. This accounts for 62% of all properties for rent in the metro. Houston came in fourth with 2,400 units, followed by Austin at seventh with 1,700. San Antonio was not far behind, ranking eighth on our list with 1,300 rental houses built between 2019 and 2023.
Sunny California and Florida metros were also high on our list. More specifically, Jacksonville, FL ranked tenth with nearly 1,300 single-family homes for rent completed since 2019, while Tampa tripled its number of build-to-rent houses by adding 1,100 units during the same period. On the West Coast, the Riverside, CA, metro built over 1,000 rental houses in the last five years, bringing its total supply to more than 4,400 units.
To read the full report, including more data, charts, and methodology, click here.
