Construction of Rental Homes Plunges After Congressional Fight Over Restrictions on the Sector

Construction of single-family, built-to-rent homes declined in the second quarter of 2026, driven by a combination of factors, including rising costs and confusion over federal legislation, according to a new analysis.

The National Association of Home Builders found the built-to-rent market saw a downturn in the second quarter of 2026. Approximately 15,000 single-family, built-to-rent units broke ground during this period, compared to 18,000 starts in the second quarter of 2025.

Overall, build-to-rent home starts are down 16% over the last four quarters compared to the previous four quarters.

Built-to-rent homes are an increasingly popular real estate model in which developers plan and build communities meant to be rented out rather than sold. Rather than individual ownership, a company or property management group owns an entire community or development.

Builders like build-for-rent properties because they offer a quicker path to consistent and predictable income. Renters like them because they often offer more space and additional community amenities you wouldn't see in individually rented homes.

Despite their popularity among builders and renters alike, build-to-rent dwellings still make up a relatively small portion of the housing market—around 7%, though that's up from the historical average of 2.7%.

One major factor behind the drop in build-to-rent production was uncertainty around the 21st Century ROAD to Housing Act.

The act addresses a variety of housing-related issues, with the aim of improving housing supply and affordability. When it was first proposed, it required build-for-rent single-family dwellings to be sold within seven years.

That would have been a major deterrent for build-to-rent companies, and would have no doubt had a deleterious effect on the already-strapped housing supply.

Had the provision remained in place, the NAHB predicted it would have significantly cut into the rental home market, depleting the rental housing supply by 40,000 to 72,000 units each year, and displacing rental tenants.

For many, renting remains more attractive than home ownership.

According to the Realtor.com® July 2026 rental report, renting a starter home is still a more affordable option than buying in the top 50 metros, with renters saving an average of $858. And rents are continuing to fall: The national median asking rent fell 1.4%, compared to a year ago. 

Congress reverses course

Developers and investors argued the seven-year sale provision would freeze billions in housing investments and halt new construction before projects even began, shutting down a viable path to easing strain on the housing market.

Congress listened, and in May, the House approved an amendment to the bill repealing the seven-year sale requirement.

Build-to-rent proponents celebrated the move.

As Jordan Berger, the founder and editor of CRE Daily put it, built-to-rent "delivers a middle path, providing single-family lifestyles without the ownership commitment. Critically, the ability to finance and build at scale means institutions are necessary players in delivering large volumes of new inventory—if local regulatory and financial conditions align."

At its most recent earnings call, Dallas Tanner, president and CEO of Invitation Homes, one of the largest build-to-rent developers in the country, said he was "pleased that the law lets us keep doing what we do best—offering a valuable housing solution to the millions of Americans who choose to lease."

Bryan Smith, the CEO of American Homes 4 Rent, called the revised bill "a thoughtful approach by policymakers to address housing affordability" during the company's most recent earnings call.

He said the policy shift "recognizes the important role that single-family rentals play in the broader housing ecosystem and reinforces a number of aspects of our value proposition."