(Reuters) - U.S. apartment vacancy rate was flat in the fourth quarter, while rents continued to rise due to a strengthening economy and labour market, real estate research firm Reis Inc said on Monday.
Reis said it expects the vacancy rate to slowly drift upward this year due to a significant level of anticipated construction.
Rents will continue to rise in 2015 but at a slower pace stymied by the sheer number of new units that are going to come online, Reis said.
The national vacancy rate was 4.2 percent during the fourth quarter, unchanged from the third quarter. The vacancy rate had risen slightly by 10 basis points in the third quarter, which was the first increase in roughly five years.
Rents reached record-high nominal levels during the fourth quarter, but grew at a slower pace than in the third quarter.
Asking and effective rents rose 0.6 percent during the fourth quarter. Asking rent had risen 1.1 percent in the third quarter, while effective rents - what the tenant actually pays on an annual basis after discounts - rose 1.2 percent.
New York remained the most expensive market in the country with effective rents registering $3,223 per month, a 44 percent premium to San Francisco, which remained the second-most expensive market, the report said.
However, New York was among the cities with the highest percentage gains in the vacancy rate due to a faster increase in supply than demand, the report said. New York's vacancy rate increased by 60 basis points to 3.3 percent in the fourth quarter.
Reis also noted a strong rise in vacancy rate in markets such as Charleston, Austin, Wichita, Birmingham and Raleigh-Durham.
San Jose remained the tightest market in the United States in the fourth quarter with a vacancy rate of 2.4 percent, a decline of 10 basis points from the third quarter, buoyed by strong demand due to the thriving technology industry and relatively limited new construction, Reis said.
(Reporting by Ankit Ajmera in Bengaluru)