Leases of single-family rentals leapt 9.4% year over year in December, with 3,283 leases signed. At the same time, new listings jumped 21.2% year over year with 5,486 SFRs added to the MLS, providing a plethora of single-family options for Houston renters. Amid increased inventory, the typical SFR stayed on the market for 48 days, up one week from December 2024.
For the full year, renters signed 47,292 leases, up 6.2% from 2024. The total dollar value increased 6.9% to over $110 million.
Lease prices were relatively flat throughout the year, with the average declining 0.8% year over year to $2,245 in December. That was nearly $20 cheaper than December 2024 and marked the sixth-straight month of statistically unchanged prices.
“A growing supply of rental properties gave renters more flexibility in 2025, while steady demand kept leasing activity moving at a healthy pace without putting upward pressure on prices,” said HAR Chair Theresa Hill. “Even as interest rates ease, rental demand is expected to remain strong this year.”
For townhome and condominium rentals, leasing activity in 2025 stuttered compared to 2024 but increased annually in December. Houston renters signed leases for 7,171 condos and townhomes in 2025, down 3.9% year over year, but leased 518 in December, up 11.2% from December 2024. Days on market increased from 49 days to 51 days.
As prices cool for attached homes in Texas, real estate investors are taking advantage of the discounts, according to a Cotality analysis.
Investors accounted for 39.5% of all attached-home sales in 2025, compared to 31.8% for detached homes. That’s much more significant than the national investor share of 30.5% for attached-homes sales.
And while attached-home prices are declining in Texas, rents are growing: Nationwide, rents increased 1.58% from 2024 to 2025 while prices stayed flat. In Texas, rents increased 2.56% during the same time period while prices dipped 4.03%.
“The trend is clear,” Cotality analyst Brian Lopez wrote. “Investor behavior is responding directly to where value has emerged fastest. Attached inventory is now priced to move, and capital is moving with it.”
Lopez called that trend a “yield play”:
“The purchase price is shrinking while rent is expanding,” he said. “Investors are capitalizing on a unique window to acquire assets at 2022 prices but lease them at 2025 rates. That means stronger yields on new acquisitions and a higher return profile across both short-term cash flow and longer-term upside.”
Cotality predicts Texas’ attached-home price trend will begin to curb early this year. The company projects 3.2% annual growth through 2030 — making now an ideal time to jump into the market as an investor.
As rent growth continues to outpace property values, Lopez said, Texas could serve as a model for similar markets elsewhere in the country, including Florida, Arizona and the Carolinas, where attached-home prices are softening as supply catches up with demand and affordability remains strained for prospective first-time buyers.
President Trump’s pledge to ban large investment firms from buying single-family homes dinged the stock prices of some of the biggest institutional landlords, but the impact it would have on the housing affordability crisis is debatable.
Observers noted that major investors like Blackstone, Invitations Homes and American Homes 4 Rent own only about 1% of the single-family homes in the United States, and their holdings are concentrated in the South and Sunbelt, so the impact on overall U.S. home prices would vary widely by geography. Additionally, in the markets with relatively high concentrations of institutional ownership, home prices are already declining.
“The administration’s proposed ban on large institutional investors buying single-family homes aims to curb Wall Street’s role in housing, but evidence shows little connection between institutional ownership and affordability,” Jonathan Miller, president and CEO of property appraisal firm Miller Samuel, wrote in his HousingNotes blog.
“Their holdings are concentrated mostly in the South and Sunbelt, where inventory is relatively high and home prices have actually fallen, undermining claims that these investors drive housing costs higher. With most investor-owned homes held by small, local landlords, the proposed restriction is unlikely to meaningfully improve affordability or housing supply.”
Nevertheless, others expressed optimism that a ban would indeed have an impact in markets with high levels of institutional ownership.
“Because the Dallas–Fort Worth market has long been a hotspot for institutional ownership, any new restrictions from the Trump administration would likely be felt here sooner and more acutely than in markets with lower investor activity,” said Todd Luong of REMAX DFW Associates. “In many price ranges, especially entry-level and mid-priced homes, buyers have been competing against all-cash offers from large investment groups. Reducing that competition could give local buyers a better chance to secure a home with less pressure and more favorable pricing.”
Details about the ban have been scarce, and many questions remain. In a post on his Truth Social site announcing the proposed ban, Trump said, “I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it. People live in homes, not corporations.”
He added that he would provide more information on the proposal when he speaks at the upcoming World Economic Forum in Davos, Switzerland, in two weeks.
In a subsequent post, Trump said he would instruct Fannie Mae and Freddie Mac to use a purported $200 million in cash holdings to purchase mortgage bonds to bring mortgage rates down.
Timing of that proposal is everything, according to Victor Kuznetsov, managing director and co-founder of Imperial Fund Asset Management.
“In the short term, expect mortgage rates to level tighter than 2025 averages, but investment bank researchers tend to agree that most of these [mortgage-backed security] purchases have already been priced into rates, so the timing of the [government-sponsored enterprises’] MBS purchases will be important,” Kuznetsov said. “Will the GSEs purchase $200 [billion] over 2026’s calendar year, spreading out the tightening effects over a full year? Details on deployment timing have been sparse so far.”
According to the housing blog ResiClub, the most significant questions about the ban include:
What constitutes an “institutional investor”?
Would the investors be required to sell existing properties, or would they just be prohibited from purchasing additional ones?
Would the ban apply to existing properties scattered throughout a market, or also to build-to-rent development?
What would happen to existing tenants if the owners were forced to sell their homes?
In the end, industry observers agree that the ban would have a limited effect on overall housing affordability, and the key to bringing down costs is by increasing inventory.
“The first thing to do is build more housing starting now,” Miller said.
Demand for rental housing is rising as the cost of ownership has risen.
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In his movie “Annie Hall,” Woody Allen recounts an old joke in which one woman asks another about a restaurant, and the other woman says “nobody goes there anymore; it’s too crowded.” In a similar way, some real estate investors are pausing their built-for-rent (”BFR” or “BTR”) projects, because they fear that it is about to become too crowded. This concern is justified in certain submarkets around the country, such as an area west of Phoenix, where there are seven built-f0r-rent cottage developments along a single 1.5 mile stretch of road. In most parts of the country, however, new supply is still falling far short of the demand for these kinds of rentals. Now it looks like some of the sidelined capital is about to resume investment activity in this space.
We define built-for-rent single-family housing as including the following purpose-built rental types: single-family homes built on individual lots, townhomes, duplexes and quads, and cottages developed on a single plat of land (sometimes called “horizontal apartments”).
When considering the outlook for this segment, which is universally regarded as one of the strongest segments of real estate, it is important to look both short-term and long-term. Here we look at both horizons.
Short-Term (Year 2023)
In our research today, we are seeing a sharp slowdown of rent growth, going negative in some places, but we see this as being limited to the current year (2023), after which rent growth will be decidedly positive.
It only stands to reason that rent growth had to slow down from the 15%-18% annual growth rates of the last couple of years. There is some confusion as to how much of a rent slowdown has already occurred.
The reader should beware of articles stating that rent growth is still in the range of 8%-10% today. Those statistics are looking at year-over-year percent-change instead of month-over-month. Year-over-year statistics have the advantage of eliminating seasonality, but they also obscure turning points.
The fact that often gets missed is that month-over-month, rents are flat or down.
One of my favorite data sets to watch is the CoreLogic SFRI (Single-Family Rent Index), which get quite granular at the local-market level. Again, it is valuable right now to look at month-over-month data in order to spot possible inflection points. This graph illustrates that even though most markets are still up compared with twelve months ago, many are flat or down as of the last couple of months.
Austin’s single-family rents peaked in the Fall of 2022, and Miami single-family rents have been … [+] going sideways since last Summer. Orlando continued to see strong rent growth until the latest two months of data.
CoreLogic Single-Family Rent Index through October 2022, Analyzed by Hunter Housing Economics
Why did demand soften all of a sudden, starting last summer/fall? That is when people started to become fearful of a recession (and therefore, their income prospects). This caused people who were living with friends, roommates, or relatives, to defer plans to make the leap and get a rental of their own. Looking at the consumer confidence numbers, however, we see that confidence has started to come back up again.
We can expect household formations to improve, boosting rental housing demand, once consumer confidence rallies further. People who survive the layoffs that seem likely to arise later this year (most people will) will eventually decide to “get on with life,” particularly if they recently had a child and feel the strong need to have a home of their own with some private outdoor space. Based upon this outlook, the weakness that is just starting to show up in single-family rents will be relatively short-lived. Demand fundamentals are still strong. The graph below shows the recent actual trend in single-family rents, which has declined on a month-over basis for the past three months, but is expected to start to regain its footing in 2024 and 2025. Forecasts are subject to significant error, of course, particularly during times of volatility, but this suggests a path forward that is consistent with what we are seeing in the market, the pipeline that is coming to market, and the demographic and economic forces that are at work.
The historical data in this graph are from the Corlogic SFRI (single-family rent index), with … [+] October 2023 being the latest actual number. The forecast portion is from Hunter Housing Economics.
Hunter Housing Economics January 2023 BFR Forecast
Longer-Term: The BFR Outlook for 2024 and Beyond
Whereas prior generations had children while they were in their mid-20s, many millennials have deferred childbirth to their 30s, and some studies suggest that they are going to start families in larger numbers over the next several years. With a newborn or a toddler in an apartment, these young families would typically prefer a house with a yard, and more space in general than they might have in an apartment. That is the key to the growth in demand that we expect for built-f0r-rent single-family homes. The demographics show that as the “bulge” of millennials moves up in age over the next four to five years, demand for family-friendly housing will increase.
Combine that with the fact that millennials are moving up rapidly in their careers. Granted, their income growth will likely slow in 2023 as the economy softens, but the economy is likely to begin the next recovery cycle in 2024 and 2025, bringing strong percentage increases in incomes. Income growth is not going to stay at 11%-12% in 2023/2024 perhaps, but 8%-10% earnings growth is not unreasonable for people in their 30s to expect. That will support rent growth at single-family rental communities. A recent analysis by RealPage showed that market-rate renters are currently only spending 23% of their income on rent, which is well below the 30-33% that is considered a ceiling. There seems to be room to run, at least after the economy gets past this slump and demand starts roaring again.
The forecast for BFR volume is shown below.
This graph captures all types of built-for-rent communities, from single-family to cottages, and … [+] townhomes and duplexes, triplexes, and quads. The forecast calls for slower growth in 2023, accelerating again in 2024.
Hunter Housing Economics January 2023 BFR Forecast
This ramp-up over the next five years, tapering off by 2027, is consistent with the view that monthly-payment challenges will continue to divert single-family demand toward rental homes, and with the evolving needs of the 83 million members of the millennial generation, who are now outgrowing apartment living. The total number of units being built for rent came to roughly 120,000 last year, and will edge higher this year, followed by a significant uptick in 2024.
With the current concerns about the economy, many have observed that certain capital providers are on the sidelines. I have spoken with several institutional investors who say they are now in a holding pattern, given the recent changes in financing rates and housing demand, but also with many others who are still ready to invest in the immediate term in BFR. And, sooner or later the capital that is on the sidelines will re-enter the market, sending this sector to the high levels we’re showing on the bar chart. Our research suggests that (with the exception of Phoenix), the country is far away from being “too crowded” with BFR single-family projects. Once we get past this current slump, supply is expected to be chasing demand well into this decade.
