By Mary Salmonsen (MultiFamilyExecutive.com Article) —
The apartment vacancy rate rose to 4.7% in the fourth quarter of 2019, up from 4.6% in the third quarter, according to the latest REIS Preliminary Trends Report. The vacancy rate was 4.8% at the end of 2018 and 4.6% at the end of 2017.
Both the national average asking rent and effective rent rose by 0.5% in Q4 2019, up to $1,498 for asking rent and $1,426 for effective rent. Average asking and effective rents have risen by 3.7% and 3.8%, respectively, since the fourth quarter of 2018, marking the lowest annual rent growth rate in two years.
Net absorption was 21,500 units in Q4 2019, down from 46,511 in Q3 2019. Construction was 30,159 units, down from 51,992 unit completions in the third quarter. New completions totaled 176,565 units in 2019, down from 265,041 in 2018, while 2019’s net absorption fell short of the previous year at 177,599 units.
Vacancy rates rose in 35 of the 79 metros tracked by REIS for the fourth quarter, up from 23 metros in the previous quarter. Metros with the highest vacancy rate increases included Fairfield County, Conn.; Charlotte, N.C.; Greensboro/Winston-Salem, N.C.; New Haven, Conn.; and Dallas. Occupancy growth was strongest in major metros in California, including Oakland and San Bernardino/Riverside, and Florida, including Fort Lauderdale and Jacksonville.
Fourteen metros experienced effective rent growth of 1% or more in the fourth quarter, led by Charleston, S.C.; Chattanooga, Tenn.; Tuscon, Ariz.; Pittsburgh; and Phoenix. Four metros showed an effective rent decline: Fairfield County, New Haven, Richmond, Va., and Northern New Jersey.
Eleven metros experienced 5% or greater annual rent growth, while only one—New Haven—showed a decline in rent. Knoxville, Tenn., had the highest effective rent growth for the year at 6.8%, followed by Phoenix at 6.4%.
New York City saw no change in vacancy at 4%, while its average effective rent grew 0.4% this quarter to $3,599 per unit, or up 3.7% since 2018. San Francisco’s effective rent grew 0.5% this quarter to $3,153 per unit, up 4.4% since the end of 2018.
Overall, while apartment occupancy growth slowed in the fourth quarter, demand growth remained in line with supply growth and is expected to remain healthy through 2020. The housing market is anticipated to accelerate in the coming year, but the REIS report notes that “as long as job growth remains healthy, the demand for both will stay positive shoring up home prices and rents equally.”