Rental Vacancy Rate Hits 10-Year Low

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Rental vacancies continue to drop and costs are going up across the country, as wary residents continue to steer clear of the housing market.

All 82 metropolitan areas tracked by real estate analytics firm Reis Inc. reported price increases during the second quarter, and the average vacancy rate in the U.S. fell to 4.7 percent, down 0.2 percent from the previous reading to a low not seen since the fourth quarter of 2001, according to a July 5 report.

Prices increased to an average $1,091 per month, 1 percent higher than 2012's first quarter and the biggest increase since the third quarter of 2007. The average effective rent, which excludes perks designed to entice potential tenants, rose 1.3 percent month-to-month nationwide, to $1,041, and about 2.2 percent year-over-year.

Memphis, Tenn., had the lowest vacancy rate at 9.2 percent. The lowest rental price of the 82 urban areas that Reis tracks was in Wichita, Kan., where the average monthly rent of $510 was less than half the national average.

At the other end of the spectrum, effective rents rose 1.7 percent from the previous quarter and 3.9 percent from a year ago in New York City, where the average renter's effective monthly rent of $2,935 is more than $1,000 higher than San Francisco, the second-highest area.

A lack of new construction has forced demand up in urban areas, shrinking vacancy rates and driving prices up. A recent report from the Census Bureau showing multifamily construction up in May could start to drive prices back down, but the slowing jobs numbers and uncertain overall economy are unlikely to substantially change the current rental and housing trends.