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A growing share of new houses in the United States are not being built for buyers at all. They are being built specifically for renters.

The trend, known as build-to-rent housing, has been expanding quickly over the past decade as home prices rise and more Americans delay or skip homeownership. About 7% of newly built single-family homes are now entering the market as rentals instead of homes for sale, according to the National Association of Home Builders.

The number of these homes has surged. More than 10 times as many build-to-rent homes were completed in the U.S. in 2024 compared with a decade earlier, reflecting strong demand for rental housing that offers the space and privacy of a house rather than an apartment.

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Build-to-rent communities typically consist of clusters of detached houses that look like a normal subdivision. The difference is that the homes are owned and managed by a single company rather than individual homeowners.

Developers such as NexMetro Communities, one of the companies specializing in the model, have focused heavily on fast-growing Sun Belt markets where population growth and available land make development easier. States such as Arizona, Utah and Ohio have seen a surge in these projects.

The homes are usually smaller than traditional single-family houses and designed to appeal to renters who want more privacy than apartments offer, according to analysis by the Brookings Institute. Many come with small yards and garages but include maintenance handled by the property owner.

Developers say the renters often fall into two main groups: younger professionals who are not ready to buy yet and older residents who prefer not to deal with the cost and upkeep of owning a home.

The growth of build-to-rent housing is happening as the U.S. faces a major housing affordability crunch.

A U.S. household now needs to earn about $110,000 per year to afford a typical home, according to Redfin. That is roughly 29% higher than the nation's median household income.

Despite a recent uptick in construction, the U.S. still faces a major housing deficit.

According to a report from Realtor.com on housing supply in 2025, the country is still short about 3.8 million homes, even after construction activity improved last year.

Homebuilding did make some progress in 2024. More than 1.6 million homes were completed last year, the highest level in nearly two decades, according to Realtor.com. New construction even briefly outpaced household formation for the first time since 2016.

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Even with the recent pace of construction, Realtor.com estimates it would take about 7.5 years to close the housing supply gap if current building trends continue.

The imbalance has had a visible effect on the market. Home prices have steadily climbed since 2012 as demand has consistently outpaced supply.

Low vacancy rates reflect the shortage. The homeowner vacancy rate fell to a historic low of 0.7% in 2023, and while it recovered slightly to 1.1% in late 2024, it remains well below historical norms, according to U.S. Census housing data cited by Realtor.com.

Some housing economists say build-to-rent projects help close that gap.

If developers build more homes overall, it increases housing supply and can help relieve pressure on prices for both buyers and renters. In many cases, analysts say these rental houses might not have been built at all if they were intended only for buyers.

The rise of investor-owned housing has also become a political flashpoint.

Speaking at the World Economic Forum in Davos, Switzerland in January, President Donald Trump said the U.S. should not become a "nation of renters" and called for Congress to restrict large investors from buying existing single-family homes and converting them into rentals.

At the same time, policy discussions have generally treated build-to-rent developments differently because they involve building new housing rather than purchasing existing homes.

Trump's executive order in January aimed at investor purchases includes language that still allows companies to continue developing new build-to-rent housing.

Mortgage rates may also influence the trend. The average 30-year fixed mortgage rate recently dipped below 6% for the first time since 2022, according to Freddie Mac. Lower borrowing costs could make buying slightly more affordable, although economists warn that if demand increases without more supply, prices could rise again.

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The shift toward build-to-rent housing also reflects American's changing attitudes about homeownership.

For decades, owning a home was seen as a central piece of the American dream and a key way families built wealth. But some renters now value flexibility more than ownership.

Rental supply has also tightened. The National Association of Realtors reports that the U.S. had about 800,000 fewer single-family homes available for rent in 2024 than a decade earlier, partly because investors have sold some rental houses to buyers.

Housing economists say the country likely needs both more homes for sale and more homes for rent.

For many Americans, financial math also plays a role.

According to LendingTree, renting is currently cheaper than owning in the 100 largest metropolitan areas in the U.S. Some financial planners say renters who invest the money they save compared with homeownership costs can still build wealth over time.

Others simply prefer the convenience. Renting means maintenance, repairs and yard work are typically handled by the property owner.

As the housing shortage persists and homeownership remains expensive, build-to-rent housing is becoming a bigger part of the U.S. housing market. Increasingly, the new house going up down the street might not be for sale at all. It may already be destined for the rental market.

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This article America Is Now Building Houses No One Can Buy — Just Rent originally appeared on Benzinga.com

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