Real Estate, Rental, and Leasing Sector Trends

The real estate industry’s high profit margin makes it a lucrative sector for a new company. However, current business trends suggest that the COVID-19 pandemic’s effects on the economy and remote work has significantly altered the real estate industry as a whole.

Key market indicators ensure that this industry is stable and meant to last, but urban flight (i.e., the process of moving from cities to more rural areas) and the hot homeownership market of recent years has introduced volatility, indicating that the real estate sector’s revenue will likely decline in the coming years. 

Recommended: Visit our Business Trends page to explore interactive data for other industries.

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Key Sector Indicators

Market Revenue: $1.2 Trillion
Profit: $571.4 Billion
Profit Margin: 48.9%
Number of Businesses: 4 Million
Employment: 5 Million

Current Sector Trends

Economic indicators measure the economic health of a sector. Understanding where a sector is as well as its future projection is crucial for creating effective business strategies and maintaining profit margins. Check out these economic indicators identified by the Census Bureau:

  • New Residential Construction: The number of privately-owned buildings authorization to be built and in the process of being built
  • New Residential Sales: The sales of new, single-family homes
  • Rental Vacancy Rate: This is the percentage of rental property that is unoccupied. High rental vacancy rates are associated with low demand, while low rates indicate too little supply of rentals.
  • Homeownership Rate: The percentage of homes occupied by the homeowner.

New Residential Construction

A blue arrow pointing down

September 2021

-1.6% change

August 2021

+1.2% change

Privately-owned housing starts in September 2021 were at a seasonally adjusted annual rate of 1,555,000. This is 1.6 percent (+/- 11.4%)* below the revised August 2021 estimate of 1,580,000.

New Residential Sales

A blue arrow pointing down

August 2021

+1.5% change

July 2021

+6.4% change

Sales of new single-family houses in August 2021 were at a seasonally adjusted annual rate of 740,000. This is 1.5 percent (+/- 15.1%)* above the revised July 2021 estimate of 729,000.

Rental Vacancy Rate

A blue arrow pointing down

2nd Qtr 2021

+6.2 percent

2nd Qtr 2020

+5.7 percent

The rental vacancy rate in the second quarter 2021, 6.2 percent, was higher than the rate in the second quarter 2020. The rates in the Northeast and West were higher than their second quarter 2020 rates. The rates in the Midwest and South were not statistically different from the second quarter 2020 rates.

Homeownership Rate

A blue arrow pointing down

2nd Qtr 2021

+65.4 percent

2nd Qtr 2020

+67.9 percent

The homeownership rate in the second quarter 2021, 65.4 percent, was lower than the rate in the second quarter 2020. The homeownership rates in the Northeast, South, and West were lower than the rates in the second quarter 2020, while the rate in the Midwest was not statistically different.

Real Estate Sector Revenue Trend

Market revenue is an important key indicator for understanding how much money is coming into a sector. The following graph shows the utility industry’s profit revenue since 2013. Additionally, a projection for the sector’s future revenue through 2026 is given.

Hover over the graph to see the sector’s total revenue for a particular year.

(This graph is interactive!)

Major Players and Industry Competition

The major players in this industry make up less than 2% of the industry’s total market. This suggests that new small businesses are able to be competitive since there is not a large monopoly in this sector.

(These graphs are interactive!)

Real Estate, Rental, and Leasing Business Formations Trends 2018–2020

Total business applications in this sector:

2018: 261,547

2019: 217,327

2020: 203,770

These graphs show the number of business formation applications each month for the real estate, rental, and leasing sector. Business formation applications measure the number of small businesses and companies entering the industry. 

(These graphs are interactive!)

Business Concentration in the US

Given that economic activity within the real estate, rental, and leasing sector correlates with population size, it’s no surprise that the four most populous states, California, Texas, Florida, and New York, make up roughly 40% of the nation’s real estate, rental, and leasing industry. Below, you will find sector-specific trends by state.

Click on a state to see:

  • Percent of Total Real Estate and Rental Businesses Nationwide: The percentage of US businesses in the real estate and rental sector within that particular state.
  • Percent of Total Population Nationwide: The percent of adults (18+) within the United State that are residents of that particular state.
  • Population: The number of adults (18+) that are residents of that particular state.
  • Personal Income Per Capita: The amount of money earned per person (found using the state’s income over the state’s population).

(This map is interactive!)

Key External Drivers for Real Estate

These figures show key external drivers since 2009 for the real estate, rental, and leasing sector. Key external drivers are factors that offer both small businesses and large companies a glimpse of the sector’s overall health and current industry trends. Use the dropdown menu to select a key external driver. Once selected, hover over the graph to see key external drivers for a particular year.

Key external drivers included are:

  • Homeowner Vacancy Rates: The percentage of homeowner inventory (i.e., available houses) that is unoccupied and for sale. A high homeowner vacancy rate indicates that many unoccupied properties are up for sale and the demand for these properties is low.
  • Rental Vacancy Rates: The percentage of rental properties that are unoccupied but available to rent. A high rental vacancy rate indicates that the supply of rentals is high and the demand for these properties is low.
  • Private Residential Construction: The number of privately-owned buildings authorization to be built and in the process of being built.
  • Homeownership Rate: The percentage of homes that are occupied by the homeowner.
  • Unemployment Rate: The share of workers that are not employed and actively looking for work.

(This graph is interactive!)

TRUiC's Most Popular Business Ideas in This Sector

Here are our most sought-after business pages related to this industry:

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References