The U.S. apartment market staged a strong performance in the second quarter, according to Marcus & Millichap's quarterly Performance Monitor, which indexes the apartment market's performance and recovery. Completions declined and absorption increased significantly, resulting in reduced vacancy and healthy effective rent growth.

During the quarter, property owners realized the third largest year-over-year gain in revenue growth since the beginning of the decade, with the strongest growth registered in markets where home-ownership remains most expensive. When compared to the same period one year ago, revenue is up 4.2 percent.

Owners should note, however, that competition among for-rent condos will continue to drive the use of concessions for higher-end apartments, while effective rent growth for affordable apartments is expected to rise.

Looking forward, apartment vacancy is expected to increase modestly by year's end, as a large share of this year's new supply is expected to come online in the second half. Competition from the shadow rental market will be tempered by the return of homeowners to the renter pool as ARMs reset at significantly higher interest rates, making payments unaffordable for many households.