With would-be homebuyers continuing to sit on the sidelines, rental vacancies dropped to a 10-year low last quarter, driving up rental prices to record levels around the United States, reports the Wall Street Journal. Rental prices have reached record highs in 74 of 82 markets measured by real estate tracking firm Reis. The biggest climb last quarter came from New York City, where average rents jumped 1.7% to a hefty $2,935 per month.
"The market is in a very tight position," Reis said in a research report. "There is a paucity of available units." Nationwide, rental vacancy rates are just 4.7%—only the third quarter in 30 years they have been below 5%—down significantly from 8% in 2009, around the worst part of the economic downturn. But with people worried about job security, tighter lending standards, and wariness over long-term housing prices, rental demand is expanded to stay strong, pushing rents ever higher. The one wildcard, however, is new apartment construction—builders are racing to begin 235,000 units this year, then 285,000 in 2013, and 320,000 in 2014. A flood of new units could drive rents back down.