Los Angeles' multifamily market could be headed for a slowdown despite rising rents and low vacancy rates, a new research report indicated.

The average rent in Los Angeles County increased to a record monthly high of $2,131 per unit, an NAI Capital report found. That represents a 4.7% increase over third-quarter 2021's rent, but that single-digit increase is a departure from the white-hot growth of last year.

“It points to a lower trajectory on real rent growth in the marketplace,” NAI Capital Managing Director of Research J.C. Casillas told Commercial Observer. “We’re probably not going to have double-digit rent growth going forward.”

On a national level, this phenomenon has played out as well. Realtor.com reported rent growth in September reached its slowest pace since early 2021.

But the lower rental rates haven't meant more room to move in the local apartment market. LA County vacancy dropped to 3.4% in the third quarter of this year. NAI Capital says this is a sign of the impact of renters not having the ability to become homeowners as a result of rising home prices and, more recently, interest rates.

Plus, the construction pipeline isn't keeping up with demand. Multifamily units under construction decreased by 1.9% quarter-over-quarter to just over 34,000 units, due in part to the pressure of inflation on borrowing costs. This could mean a kink in the development pipeline in future quarters.

Those same inflationary pressures are also likely keeping some renters from making the switch to owning a home, Casillas told CO.

Though there have been a few sales this year, overall third-quarter sales volume was down 12.2% year-over-year to $2.8B in the third quarter, NAI Capital found. That figure was a 33% drop from the the second quarter of this year.

Nationally, rents have fallen consistently for the last three months, Bisnow has reported. Though year-end declines are not uncommon, the fact that it was yet another month of consecutive declines signals a correction and slowing demand, ApartmentList said in a report.