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Apartment demand continues to rebound and normalize; however, it’s failing to keep pace with the massive amount of supply coming online, according to RealPage Market Analytics’ third quarter report.

Apartment completions in the third quarter hit the highest levels since the 1980s, with more than 128,000 units coming online. The apartment market absorbed 90,827 units for the period, which is the largest quarterly reading in nearly two years and roughly in line with long-term seasonal norms.

Slowing inflation and a strong job market are boosting consumer confidence and spurring household formation among young adults, according to RealPage. The influx of new supply is giving renters a lot more options, with demand primarily going where supply is—especially to the Sun Belt. Occupancy decreased 10 basis points in September, settling around the long-term average of 94.4% at the end of the quarter.

“It’s a good reminder that the challenges facing the apartment sector today have nothing to do with demand fundamentals and everything to do with a 50-year high in apartment construction combined with expense pressures and the rapid spike in interest rates upending the financing market,” noted RealPage.

According to RealPage, the high supply has reversed the industry trajectory over the past 18 months from record-low vacancy rates and record-high rent growth to a more normalized vacancy and rent growth that is flat or decreasing.

In September, effective asking rents fell 0.3% nationally, bringing year-over-year growth down to 0.1% compared with the 9% seen one year ago. On an annual basis as of last month, rent cuts were common across the West (-1.1%) and the South (-0.8%), while the lesser-supplied Northeast (3.1%) and Midwest (2.5%) proved to be the rent growth leaders.

The high supply has put downward pressure on rents in once-hot markets, with Austin, Texas; Phoenix; Atlanta; and Jacksonville, Florida, seeing rent cuts above 4%. Looking at the growth leaders, six metros saw rent increases top 3% as of September. New Jersey’s Newark-Jersey City led the pack with 4.3% growth, followed by Cincinnati, Milwaukee, Chicago, Boston, and Kansas City, Missouri. RealPage noted the rate of supply expansion trailed the U.S. average in five of the six markets, with the exception of Kansas City, which came in a tick above.

“There’s a remarkably clear relationship between supply levels and rent growth,” stated the report. “In the 10 largest metro areas with the deepest rent cuts, the average rate of apartment supply expansion was nearly double the U.S. average. In the markets with largest rent increases, on the other hand, the average rate of supply expansion came in below the national average.”