The national apartment vacancy rate was 4.7% in the third quarter of 2019, unchanged from the last quarter and flat year over year from Q3 2018, according to the Reis Q3 Preliminary Trends report. Overall, vacancy has shifted 0.3% in the last two years for the markets covered by Reis.
Both the national asking rent and effective rent rose by 0.8% in the third quarter, down from a 1.3% increase in asking rent and a 1.4% increase in effective rent in the last quarter. The national asking rent stands at $1,484 per unit and effective rent at $1,413 per unit. Both average rents have risen 3.8% from the third quarter of 2018.
Net absorption was 32,871 units in Q3 2019, down from 48,698 the previous quarter. New construction also fell to 34,821 units, down from 48,026 in the second quarter. Reis still expects more apartment units to come online this year than last year, when 234,000 units were added to the market.
Vacancy rates rose in 23 metros last quarter, down from 26 in the prior quarter. Jacksonville, Fla. Tampa-St. Petersburg, Fla.; Knoxville, Tenn.; St. Louis; and San Antonio experienced the highest vacancy rate increases, while Charleston, S.C.; Chattanooga, Tenn.; Raleigh-Durham, N.C.; Palm Beach, Fla.; and suburban Maryland saw the biggest decline in vacancy.
Nineteen metros saw an effective rent increase of 1% or more in the last quarter, led by St. Louis; Charlotte, N.C.; Tampa-St. Petersburg; Austin, Texas; and Phoenix. Rent growth in each of these metros ranged from 1.3% to 1.7%. Only three metros—Palm Beach, Charleston, and Omaha, Neb.—posted an effective rent decline.
New York City’s vacancy rate fell 0.2% to 3.7% in Q3 2019, and the average effective rent grew 0.6% to $3,548 per unit. San Francisco’s effective rent rose 1.3% in Q3, up to $3,124 per unit. San Francisco’s rent has risen 3.4% over the course of the year, while New York City’s has risen 2.6% over the same period. Phoenix has experienced the highest effective rent growth at 6.9%, followed by Charlotte at 6.8% and Miami at 6.6%.
Reis notes that while apartment occupancy growth was flat in the third quarter, fundamentals remain strong and demand growth is rising in line with supply growth. The demand for apartments is expected to remain steady despite economic deceleration in other sectors. Uncertainty is anticipated in the for-sale housing market, but demand for both housing types is expected to stay positive as long as job growth remains strong.
