Phoenix experienced negative absorption of 1,451 units in the second quarter, down from the first quarter's positive absorption of 242 units, says the multifamily brokerage and research firm. "A slowdown in the local economy, coupled with Phoenix's historical summer slowdown in demand, sent absorption into negative territory," says Don Hendricks, president and CEO.

The negative absorption was compounded by an increase in construction. The number of new units started in the second quarter was 2,583 units, up from 1,958 posted in the second quarter a year ago.

The overall vacancy rate is now 8.2% in comparison to 7.8% a year ago. The Avondale area is the strongest submarket, with a 5.7% vacancy, down from 6.3% a year ago. Deer Valley falls second with its 7.4% vacancy, a drop from 8%, and Chandler comes in third, with 7.8%, down from 8.5% a year ago.