Though apartment construction reached a post-recession peak in the first half of the year, U.S. housing supply remains well below long-term averages, CoStar reports.

Household formation is outpacing construction by more than 3 million housing units, due in large part to millennials who are growing their families. Baby boomers are also playing a role, as seniors increasingly look to offload the burdens of homeownership in search of smaller, more convenient housing solutions located in urban centers.

While multifamily construction has been on a steady incline since 2011, the negative impact of the subprime mortgage collapse and 2007 recession caused such a serious decline in single-family construction that the housing market remains imbalanced.

As for the rental market, the national apartment vacancy rate has fallen to 5.9% as renters, who are primarily among the baby boomer generation, continue to drive demand, CoStar reports.

In the coming months, demand for the Class-A apartment sector is expected to remain steady but construction is expected to slow as labor and equipment shortages have started to push back construction timelines, and lenders have begun to pull back on financing apartment construction.