CARROLLTON, TX—New apartments are coming on line across the US at the fastest pace in more than a decade. Is that pace too rapid? MPF Research says no.

“The wave of new supply coming for the past year or two now is beginning to crest,” says Greg Willett, VP at MPF, the market-intelligence division of RealPage Inc. “The timing looks right for this cycle, as the job production needed to stimulate household formation also has gained some momentum this year.”

Properties finished in the nation's 100 largest metro areas during the third quarter totaled 66,813 units, the biggest block of new supply introduced during a three-month period since late 2000. The annual completion pace stood at 226,615 units at the end of September, likewise hitting a total last seen 14 years ago.

Offsetting those numbers, however, were those for demand. Q3 demand in those 100 metro areas reached 78,571 units, and has totaled 254,993 units for the first nine months of the year.

The new product delivery pace will accelerate during the next few months. Properties totaling another 90,078 units are scheduled to wrap up construction in Q4, bringing completions targeted during the calendar year to 257,767 units.

Ongoing apartment construction in the nation's 100 largest apartment markets registered at 387,397 units as Q3 drew to a close, MPF says. Ongoing building activity has been holding fairly steady at some 350,000 to 400,000 units since early 2013. However, that figure could come down quickly over the next few months, if the large block of new supply scheduled to finish during Q4 is actually completed as projected.

“Look for a minor bump in the road in the apartment market's performance right at the end of the year, given so much new supply will be added during a period when demand is seasonally weak,” according to Willett. “However, completions in 2015 should return to a level in line with 2013's deliveries, allowing performance momentum to return quickly.”

The San Francisco Bay Area and Denver remain the champions in terms of rent growth, maintaining the positions seen over the past couple of years. Effective rents for new leases are climbing at annual rates of 9.1% in Oakland, 9% in both Denver-Boulder and San Jose and 7.4% in San Francisco.

Coming in slightly below these two regions, annual effective rent growth is 6.4% in Atlanta, 6% in Seattle, 5.8% in Portland and Sacramento and 5.3% for West Palm Beach. Completing the list of annual rent growth leaders among the country's largest markets are Houston and Las Vegas, each with price increases of 4.6%.

“Las Vegas is a newcomer to the list of rent growth leaders,” says Willett. “The performance seen over the past couple of quarters is a dramatic shift from earlier results, since Las Vegas previously was one of the country's laggards for rent growth. Job production and apartment occupancy now are improving rapidly in Las Vegas, and pricing power is returning in the apartment sector.

In the big picture, however, Vegas “still has some work to do,” Willett adds. “It's the only big market in the nation where today's rents still trail pre-recession prices.”

He notes that there's “a strong appetite” for rental units nationally. “While the economy isn't performing at ideal levels, there's enough momentum to stimulate significant growth of renter households," Willett says. "The overall performance numbers in the apartment sector are also being helped by the limited number of first-time homebuyers. Loss of apartment residents to purchase remains at a trickle.”