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Increase in build-for-rent won’t derail SF rent growth

Surging demand for single-family homes has revived institutional investor interest in the single-family rental (SFR) market. With few homes available to buy, interest in build-for-rent (BFR) investment is growing. But given constraints in the home building sector and the small share of the market that institutional investors occupy, the impact on supply from the recent uptick in BFR development will be small. As a result, we expect market conditions to remain tight, supporting rental growth in the next year. Due to wider interest, this US Housing Update is also being sent to clients of our US Commercial Property Service
Sam Hall Assistant Property Economist
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US Housing Market Update

The anatomy of a housing market downturn

Measures of housing market activity and prices tend to follow a predictable sequence in downturns. In this Update we highlight the key US and UK variables that clients should follow to track the housing downturn and identify turning points. With most indicators already softening in both countries, it is just a matter of time before house prices fall. In view of the wider interest, we are also sending this US Housing Update to clients of our UK Housing Service.

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US Housing Market Data Response

New Home Sales (May)

New home sales rose in May, bucking widespread signs of a housing market slowdown. But given the volatility in the data we wouldn’t put too much weight on one month’s reading. After all, new home sales are not immune to higher financing costs and survey measures point to a fall in sales over the next couple of months. While a healthier inventory means the new home market will outperform existing sales, we still expect a fall in sales to around 630,000 annualised by end-2022.

24 June 2022

US Housing Market Data Response

Existing Home Sales (May)

Surging mortgage rates led to another fall in existing home sales in May to their lowest level since the height of the COVID-19 lockdowns two years ago. And with mortgage rates set to rise to 6.5% by early 2023, sales will see further declines. We expect they will bottom out at 4.8m annualised by the end of the year, which would represent a 23% drop from their end-21 level.

21 June 2022

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US Commercial Property Data Response

RICS Commercial Market Survey (Q2)

Improvements in occupier demand boosted market sentiment in Q2. With over half of surveyors perceiving the property cycle to be in an upturn, prospects for H2 performance look solid. But while we share surveyors’ optimism about the industrial outlook, we think they are overly upbeat on offices.

29 July 2021

US Commercial Property Data Response

US Metro Employment (Jun.)

Employment growth accelerated in June, helping office-based employment return to pre-pandemic levels in almost a third of metros. But the 3m/3m growth rate in total employment was highest in the metros with the biggest shortfalls, as the return to normalcy continued to drive employment gains.

28 July 2021

US Commercial Property Update

Why we expect a gradual recovery in lending

The recent gains in lender sentiment showed the real estate recovery is heading in the right direction. As lenders gain confidence, standards should start to loosen, and industrial and multifamily borrowers will continue to benefit. But uncertainty around the outlook for other sectors will limit the pace of the recovery this year.

26 July 2021
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