Apartment Vacancy Rate Hits 22-Year High

The vacancy rate for U.S. apartments hit a 22-year high, during what is usually the peak leasing season.

Vacancy levels nationally rose to 7.5% in the April-to-June period, up from 6.1% a year earlier, according to Reis Inc., a New York real-estate research firm. Of the 79 markets tracked by Reis, 45 showed an increase in vacancies.

Not surprisingly, rents are falling. The fastest declines are coming in markets that have shed white-collar, capital related jobs, such as New York and San Jose, California, and in markets where many foreclosed homes and condominiums have been turned into rental property, including Las Vegas and Orange County, California.

Rents, meanwhile, are falling at the fastest pace in at least a decade. Effective rents, which include landlord concessions such as one month free rent, fell 1.1% in the first quarter and 0.9% in the second quarter to an average of $975 a month. The combined decline for the first half of the year was the largest since Reis began tracking the data in 1999.

Effective rents were down 2.9% in San Jose, the sharpest quarterly drop, to $1,430 a month. New York City had the largest 12-month rent decline, at 5.8%, to an average of $2,680.

Vacancies tend to rise during periods of high unemployment because household formation slows, as would-be renters double up or move in with family members.