The U.S. apartment vacancy rate increased by 10 basis points to 4.7% in the fourth quarter of 2019, while asking and effective rents each grew by 50 basis points, the lowest quarterly growth rate in three years, Reis Inc. said.
The vacancy rate increased in 35 of 79 metropolitan areas in the quarter, up from 23 metro areas with an increase in the previous quarter. Only one area, New Haven, Conn., posted a decline in average rent, while 11 metro areas posted annual rent growth of 5% or more.
The largest vacancy increases were in Fairfield County, Conn.; Charlotte, N.C.; Greensboro/Winston-Salem, N.C.; New Haven; and Dallas. The largest declines in vacancy were in Fort Lauderdale and Jacksonville, Fla.; Washington, D.C.; and Oakland and San Bernardino/Riverside, Calif.
The largest quarterly effective rent growth rates were in Charleston, S.C.; Chattanooga, Tenn.; Tucson, Ariz.; Pittsburgh; and Phoenix, all of which posted growth rates in the 1.3% to 1.9% range. Effective rents declined on a quarterly basis in Fairfield County; New Haven; Richmond, Va.; and Northern New Jersey.
New York City's average effective rent grew by 0.4% for the quarter, with no change in vacancy, and 3.7% on an annual basis. San Francisco's effective rent grew by 0.5% for the quarter and 4.4% for the year.
Both new supply and net absorption fell nationwide for the fourth quarter and the full year. For 2019, new completions totaled 176,565 units, down from 265,041 units in 2018. Net absorption for the year totaled 177,599 units, down from 235,786 in 2018.
Reis Senior Economist Barbara Byrne Denham called nationwide rent growth "disappointing" despite healthy fundamentals. Denham said that demand for apartments increased in line with supply growth, and said the outlook for 2020 appears positive with the increased likelihood of a trade deal between the U.S. and China.