U.S. apartment vacancy rate was unchanged at 4.4 percent in the third quarter from the second, while rent growth decelerated in a period that generally sees the strongest increase, real estate research firm Reis Inc (REIS.O) said on Monday.
Asking and effective rents both expanded 0.9 percent during the quarter, compared with a 1.1 percent growth rate in the second. This was the third consecutive quarter of decelerating year-over-year rent growth.
"Developers had enjoyed healthy rent growth and significant pre-leasing just a few short years ago when the housing market was struggling to gain footing. But since then developers have been overbuilding in some markets as demand has ebbed somewhat," Reis economist Barbara Denham said in a statement.
New construction fell to 37,744 units delivered in the third quarter, a sharp decline from 53,587 units in the second, suggesting that developers were not rushing to complete construction.
However, Reis cautioned that the new construction figure for the third quarter was preliminary, and the number could be revised upward as construction data is finalized.
Net absorption totaled 37,693 units in the third quarter, the lowest level since mid-2013, likely reflecting a delayed response to the slowdown in employment at the start of 2016, Denham said.
New York remained the most expensive market with effective rents registering $3,441 per unit per month, followed by San Francisco at $2,481 per unit per month, the report said.
Sacramento, California remained the tightest market in the United States, having the lowest vacancy rate of 2.1 percent.
Reis said it expects the national vacancy rate to continue to increase in 2016, and rent growth to stay muted to below the 4 percent level on an annual basis until after the Presidential elections in November.
(Reporting by Ankit Ajmera in Bengaluru)