The apartment market continues to hit highs not seen since the tech-boom days of more than 15 years ago.

In the third quarter, MPF Research, the rental market intelligence division of RealPage, reported that annual growth in effective rents for new residents reached 5.9%, while occupancy crested to 96.1%.

That annual growth included a price increase of 2.2%, occurring July through September. MPF says the only time annual rent growth for new leases proved stronger was during the tech-boom expansion of 1999 to 2000.

The West, with annual new-resident rent growth at 8.4%, is pushing up a lot of the national rent growth, according to MPF. By comparison, rents rose 4.7% in the South, 4.5% in the Northeast, and 3.6% in the Midwest. 

MPF said renewal leases executed in the third quarter were priced 5.4% above previous rates. Also in the third quarter, 51.1% of households with expiring apartment leases chose to renew. 

“Sizable rent growth for both new-resident leases and renewal leases speaks to the apartment sector’s overall health,” said RealPage chief economist Greg Willett. “Job growth is strong enough to spur meaningful new-household formation, and the net demand level for apartments is also helped by the limited number of households leaving the rental market to make first-time home purchases.”

For rents to grow, there needs to be demand for apartments. That was certainly the case in the third quarter, when demand for apartments across the nation’s 100 largest markets came in at 85,689. That surpassed concurrent deliveries, which totaled 69,299 units.

MPF says properties under construction in the 100 largest metros at the end of the third quarter totaled 436,407 units, which was on par with the average for the past 10 quarters.

“While new supply tends to slow rent growth historically, that hasn’t been the case as of late,” Willett said. “Construction of luxury units in the most desirable neighborhoods results in new-product rents that are too high to pull many residents out of the existing stock. Nationally, the typical monthly rent for new communities is around $1,600, more than 15% above typical rents in the best properties built prior to 2010.”

MPF thinks the pace of rent increases will grow at a slower pace than we're seeing now. “[We] expect annual rent growth for new leases to remain above 4% through the end of 2016,” Willett said. “Whether or not the Western region metros can sustain their torrid price increases is the key question. While underlying fundamentals are very strong in the West, if the economy experiences an unforeseen stumble, there is perhaps greater risk of a price correction there.”