Record Number of Single-Family Rentals Reflect the Expensive U.S. Housing Market

"While still a relatively small share of all new housing, record numbers of single-family rentals were built in 2020," according to Alexander Hermann, who is sharing the findings of recent analysis by the Joint Center for Housing Studies of Harvard University.

"According to our tabulations of Census Bureau New Residential Construction data, 49,000 single-family rentals were started last year, up from 14,000 at the bottom in 2009 and surpassing the previous high of 47,000 in 2003 (Figure 1). However, single-family rentals remained just under 4 percent of total housing construction and 12 percent of rental construction."

As noted by Hermann, single-family rentals provide young, relatively modest families with children much-needed housing options. The Covid-19 pandemic has only spurred demand, resulting in the increased pace of construction, for single-family rentals.

"Indeed, single-family homes provide additional space for home offices, exercise, and remote learning; offer access to private outdoor space; and are often located in suburban areas—all characteristics associated with rising demand over the past year. At the same time, home prices have risen considerably in the for-sale market, making homebuying difficult for many moderate-income families who cannot afford rising prices and larger downpayments."

The prospect of more American families renting, rather than buying, homes has been framed as a red flag in the housing market in discussions about the growing footprint of Wall Street and large, institutional investors in the housing market. Many of those institutional acquisitions are happening at the low end of the market in suburban, single-family neighborhoods, according to recent reporting by the Wall Street Journal. Hermann's presentation of single-family rentals as a housing opportunity, thus, stands in contrast to the threat implied by the response to the news about the growing number of rental houses in the existing housing stock.