Down from 60% a year earlier, 47% of new-construction apartments that were completed in the fourth quarter of 2023 were rented within three months, according to a new Redfin report. The rate is the lowest seasonally adjusted share on record aside from the first quarter of 2020.

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Because of the influx of new apartments, competition is high between new communities coming online. In the fourth quarter, 90,260 new apartments were completed.

The rental vacancy rate has hovered at 6.6% for the past three quarters, according to Redfin. As developers pump the breaks on starts, falling below the 10-year historical average, completions are still near their record high because of the construction boom prompted by the pandemic.

Rent growth is being hindered by the backlog of new units, yet demand from renters who cannot afford to buy a home is keeping rents high. In May, the median U.S. apartment asking rent rose 0.8% year over year—the highest level since October 2022. Today, renters must earn $66,120 to afford the median-priced apartment, which is $11,408 more than Redfin estimates the typical U.S renter earns.

“Building more housing is a tried-and-true way to ease the housing affordability crisis, and, with rent and home prices at historic highs, local and federal leaders should continue to encourage more construction,” says Redfin senior economist Sheharyar Bokhari.

In the first quarter, the median asking rent for newly built studio apartments fell 20.9% year over year. New one-bedroom apartments saw an 11.9% decline, and new two-bedroom apartments saw a 1.2% drop. However, the median asking rent for new three-plus-bedroom units rose 9.1%—indicating that they’re in demand.

The supply of small apartments in America has been growing quickly, which is why the segment is seeing the largest declines in rent growth, Redfin notes. The number of studio apartments completed in the fourth quarter of 2023 was up 32.6% from a year earlier, compared with a 22.2% increase for one-bedroom apartments, a 2.3% increase for two-bedroom apartments, and a 0.9% decrease for three-plus-bedroom apartments.