Vacancy Rates Continue Higher Despite Drop in Rent

Data from real-estate-research firm Reis Inc. indicates that vacancy rates continued to trend higher in Q1 despite rent reductions by landlords.

As a WSJ article highlights, vacancy rates for the U.S.'s top 79 markets rose to an average of 7.2%, up 100 basis points over the last two quarters, all while effective rents dipped 1.1% to $984. Rents plunged in regions with heavy job losses in the financial-services sector, such as New York and San Francisco. Rents actually increased in Miami and St. Petersburg, however, which, if anything, suggests that rent declines could be stabilizing in some markets. Further, vacancies in apartments rose from 5.8% to in 2006 to an average of 6.6% last year.

Despite the concerning data, homebuilding stocks are rallying sharply today amid a deal between Pulte (NYSE: PHM) and Centex (NYSE: CTX). That's right... M&A action in the homebuilding sector.