Texas, Arizona Lead Boom Of New Build-to-rent Homes

The build-to-rent portion of the housing market is in full swing in early 2025. Over 110,000 single-family rentals (SFR) are under construction in the U.S. — and two states are leading the way.

That finding comes from a report released this week by Point2Homes, a real estate listing portal for rental homes. Alongside real estate data provider Yardi, this report exclusively includes single-family, build-to-rent (BTR) properties that are “in the pipeline,” or currently under construction.

According to the report, these SFR rentals are under construction in 613 communities. The expansion will boost BTR inventory by over 53%, the report said. BTR occupancy levels also hover near 95%. Yardi Matrix analysts believe this expansion offers a key benefit to renters looking for affordable housing options.

“More and more build-to-rent (BTR) residents consider themselves renters by preference compared to 2023 (36% in 2024 vs. 27% in 2023). The biggest hurdle to buying a home for BTR residents is high mortgage rates, so BTR homes provide an affordability solution in today’s increasingly expensive housing market,” senior analyst Doug Ressler said in the report.

“On average, renting a BTR unit is cheaper than buying a starter home. Recent reports indicate that renting can save one around $1,000 per month compared to buying. This is largely due to high mortgage rates and elevated home prices,” he added.

Point2Homes identified the top 20 markets with the most SFR units in the construction pipeline. Texas led the top states with 21,812 SFR units in construction — all of which are located in BTR communities. It is followed by Arizona with 13,972 units under construction. Florida, North Carolina and Georgia rounded out the top five.

The metro-level data tells a similar story. Phoenix, Arizona; Dallas, Texas; and Atlanta, Georgia posted SFR inventory increases between 70% and 90%. Raleigh, North Carolina had the highest increase at 334%.

Texas and Arizona are attractive locations for migrating homeowners for several reasons. The Lone Star State’s strong job market is one factor, followed by Arizona’s shift toward sustainability. Coastal states like Florida are also seeing growth due to higher demand and booming job offerings.

Looking to the future, the biggest inventory levels for SFR properties in BTR communities will lie in states that currently have low inventory. Nebraska will post a 255% increase in SFR inventory once construction finishes. Rhode Island (193%), Delaware (178%), New Hampshire (177%) and North Carolina (152%) round out the top five. While this may seem promising, Point2Homes notes that these states are playing catch-up to other state with pre-existing inventory.

Builders and developers are re-aligning their interests with rent needs, according to Point2Homes. Renters are demanding affordability and single-family spaces, which the report said “redirected both renters’ and developers’ attention to the single-family rental market, which explains (at least in part) the momentum of the sector.”

This growth is relatively new, since the SFR market in build-to-rent communities took a hit for the first three quarters of 2024, the report said. Yardi Matrix analysts stressed that the market is still vulnerable to common economic factors.

“The [50+ single-family build-to-rent] sector is impacted by the same factors limiting housing production of all types, including the cost of materials and labor, rising rates of construction financing, and concerns about oversupply in markets with robust multifamily development,” Yardi analysts said.

Meanwhile, new construction overall continues to overtake existing home inventory in the market. Also, single family rentals are still more expensive than apartments, following a five year trend.