The apartment rental market softened in the first quarter, but not as much as expected given a surge in new supply.
The apartment vacancy rate edged up to 4.7% in the first quarter, up from 4.6% in the fourth quarter of 2017, according to data released by Reis Inc. on Tuesday. The vacancy rate jumped from 4.3% a year earlier, while the average apartment rent grew 3.9%, Reis said.
By both measures, the market has cooled from the recent peak, when rent growth hit 5.8% in 2015 and the vacancy rate touched a low of 4.1% in the third quarter of 2016.
Still, the market has proved to be resilient, given a flood of new supply from developers hoping to cash in from the strong growth rate earlier in the recovery. A sharp slowdown in occupancy and rent growth hasn’t materialized.
“There’s definitely a lot of construction coming online. Even a small increase in vacancy is almost reassuring,” said Barbara Byrne Denham, a senior economist at Reis.
Nearly 59,000 units per quarter were added in 2017, compared to the historical average of around 34,000 units per quarter.
The pace of new apartment construction slowed to just under 40,000 units in the first quarter of…