Roughly 90,000 Build-to-Rent Units Underway Across U.S.

Build-to-Rent product (BTR) remains a practical option for renters not ready or not able to achieve homeownership. Factors challenging home ownership include a tight housing inventory, both for rent and for sale, coupled with volatility in mortgage rates. 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.

In the BTR space, the Sun Belt leads the nation for construction with nearly 57,000 BTR units underway as of November, according to RealPage Market Analytics. That total more than doubles the next closest region, the West, with about 23,100 BTR units under construction.

BTR, as defined by RealPage, includes single-family housing that is fully detached, semi-detached (semi-attached, side-by-side), row houses, duplexes, quadruplexes and townhouses built for rental. To make a distinction, BTR typically differs from traditional single-family rentals in that developers build this product type on land for the primary intent of renting out the housing units. Conversely, traditional single-family rentals start as homes designed for homeownership.

That said, nationwide, developers have roughly 90,000 BTR units under construction (including properties in lease-up where construction is ongoing). Construction is heavily concentrated in the South and West across states like Texas, Arizona, Florida, Georgia and North Carolina. The concentration of BTR development in these states speaks to the need for lots of space to build out single-family style homes with a plethora of community amenities, naturally lending itself to this region of the U.S.

No surprise, the South tops the nation with 56,992 BTR units expected to complete through 2nd quarter 2027. Meanwhile, the West follows with 23,115 BTR units expected to finish construction by the end of 1st quarter 2027. Following behind are the Midwest with 7,964 BTR units completing through late 2027, while the Northeast has 1,782 units set to wrap up over the next 21 months.

RealPage is currently tracking some 10,000 planned BTR units across the nation in conjunction with BTR units under construction, creating a long runway for this sector of single-family rentals. Keep in mind that the timelines for those planned projects remain subject to the current economic environment and therefore may shift.

Still, the BTR space is a viable option for both developers and renters since headwinds across single-family homeownership, especially for first-time buyers, remain in place despite a modest drop in mortgage rates. As of December 5, the weekly average 30-year rate still sat at 6.69%. For additional perspective, rates have hovered around 6% to 8% over the last two years, significantly above the 10-year average rate (4.47%).

Other headwinds include an uncertain broad economic environment tested by persistent inflation despite cuts by the Federal Reserve Board to slow spending as well as potential tariffs under a new administration which could create crunches in supply and demand.