Contributing to the Future of Housing
by Andy Bates
The build-to-rent (BTR) strategy is outgrowing its preconceived status as a fringe investment and solidifying its position as a core solution to the ongoing issue of housing inventory in the United States.
At a time when the residential real estate environment can feel adversarial, many investors wonder how they can maintain their businesses. With significant shifts in investment activity seen over the last year, BTR represents an opportunity for success while positively impacting U.S. housing as a whole in 2026.
The Shift in Housing
When trying to put a finger on the problems faced by real estate investors today, an important place to point is the purchase. Batch Data, a real estate data company, reports that as of Q1 2026 investor purchase activity went down approximately 23% from Q1 of the previous year. This is driven by a mixture of limited inventory, unfavorable rates, and the general cost of acquisition coming up against returns on investment.
Whether investors are halting production in the space due to rate pressure or stifled inventory making it harder to find deals with effective price points, they appear to be largely sitting on the sidelines in the present moment. Such inaction breeds opportunities for those with the “sticktoitiveness” to persevere and the flexibility to adjust their investment strategy.
The 21st Century ROAD to Housing Act, which was signed into public law in July of this year, has also been a source of much trepidation for investors. For BTR investors, however, this bill came with a silver lining. The removal of a provision requiring investors to dispose of certain build-to-rent properties within seven years of procurement promises a useful avenue for investors looking to stay active and modulate their approach. BTR offers an underutilized approach to acquiring new investments, one that provides value not only to the investors that build them, but to the entire ecosystem of real estate.
State of the Rental Market
While rents have appreciated cumulatively by over 30% since the onset of the pandemic in 2020 per the Bureau of Labor Statistics, the rate of that growth has stymied year-over-year since the height of rent growth seen in 2022. Throughout 2026, national rent growth figures have fallen flat to a roughly net-zero position, seemingly neither growing rents by a significant margin nor depreciating them below current values. Ultimately, rental figures currently sit at an all-time high and with occupancy trends at a point of stabilization since about mid-2025, which suggests that the market is testing, and encountering, affordability limits. All of this speaks to an environment in which investor pricing power has diminished, yet rental demand remains alive and well.
From a Supply Perspective
Analytics from the National Apartment Association (NAA) report an almost 50% reduction in new units under construction between early 2024 and 2026. While some of this decline can be attributed to natural attrition as projects under construction are completed, this lessened amount of new construction starts into 2026 indicates that capital is more selective in the present environment.
The NAA also reports that new home sales continue to be sluggish. The post-COVID rate environment brought a production boom that was ultimately hindered by rising rates in 2022 when overall transactions first dipped below 600,000 units. While purchase-counts fluctuated between 600,000 and just shy of 800,000, these figures have sunk below 600,000 again this year. For investors, this should inform a strategy of identifying ready markets to pursue for build-to-rent investments.
In recent higher-production years, BTR and even constructions made for differing purpose have boomed in popular markets. In keeping with the theme of recalibration, some of these markets have cooled off and, in their place, upticks can be seen in previously unsung markets where fundamentals are prime and deals make sense from a perspective of returns on investment. To target the right markets, investors can refine their strategy to favor assets with strong operational performance in markets still primed for growth.
The limits of pricing appear to be undergoing pressure-testing across the board in the current environment, and this is reinforced by the fact that markets which have seen heightened growth in recent years are now beginning to soften. Investors can seek out markets that, on a metro area analysis, prove to be an exception to national trends regarding rent growth.
While some major markets like Austin, Phoenix, and Tampa are currently either caught in the flattening curve of stagnation or even dipping into low-digit decline, per market financial firm Yardi Matrix, some ripening markets yet report positive rent growth figures such as Indianapolis, Chicago, and Miami.
Building Opportunities
As the housing market continues to adjust to new economic realities, BTR stands out as one of the most compelling opportunities in residential real estate. It is a strategy that is uniquely positioned to create value in a challenging environment.
With reduced investor activity, shrinking construction pipelines, and housing affordability remaining a national concern, opportunities exist for those willing to take a market-focused approach. Success will depend on disciplined market selection, a focus on operational performance, and the ability to identify regions where growth fundamentals remain strong.
In 2026 and beyond, BTR represents more than a quick fix trend in real estate; it is a durable investment approach that provides an opportunity to not only meet market needs and generate returns, but to contribute to the future of housing.
