Single-family built-for-rent home construction rose 91% year over year in the second quarter of 2022.
According to the National Association of Home Builders, there were around 21,000 single-family built-for-rent construction starts in the second quarter. From the last two quarters of 2021 and the first two quarters of 2022, there were 69,000 single-family built-for-rent construction starts, up 60% over the same time period a year prior. Multifamily for-rent construction also increased, with the highest number of units started in 36 years, at 142,000 properties.
However, construction starts for townhouses saw a decrease, dropping 9.5% year over year to 38,000 in the second quarter. Despite this drop, townhouse construction starts have ultimately risen in the last two quarters of 2021 and the first two quarters of 2022 compared to a year prior. Townhouse construction starts are up 7% to 138,000 over the same time period year over year. Ultimately, compared to all single-family starts, using a one-year moving year average, newly-built townhouses dropped to 12.5%.
Single-family home construction also saw fell. Higher mortgage rates, continued supply change problems and escalating construction costs are to blame, according to NAHB. Housing starts across demographics dropped 9.6% in July. Single-family starts fell 10.1% to 916,000, down 2.1% year over year, the lowest in more than two years. Permits for single-family homes also fell 4.3% and are down 5.9% year over year.
With so much uncertainty in the market, builder confidence continues to struggle. NAHB found that confidence levels dropped for the eighth month in a row, as buyer traffic fell and more builders reported dropping home prices. Nearly 70% said higher interest rates are to blame for the drop in housing demand.