Apartment construction during the third quarter reached its highest level since the 1980s, not only putting a lid on rent increases but also helping push down rents in some hot markets, according to a report by RealPage.

More than 128,100 new units came online in Q3, while a bit more than 90,800 units were absorbed. Occupancy dropped slightly during the quarter — by 10 basis points, coming in at 94.4%, roughly the market's long-term average, RealPage reported.

So far this year, more than 460,000 units have been completed, and more than 1 million units have come online over the last three years.

Effective asking rents dropped 0.3% in September, which brought annualized rent growth to a pace of 0.1%. While still technically growing, that rate nevertheless represents a radical change compared with the end of Q3 2022, when rents were growing at an annualized rate of 9%.

There was considerable regional variation in rents, however. In the Northeast and Midwest, where apartment construction has been muted, annualized rents continued to grow 3.1% and 2.5%, respectively. Rents were down 1.1% in the West and 0.8% in the South.

Rents were also down compared with last year in 26 of the country's largest 50 metros, RealPage reported. Rents in Austin, Texas, and Phoenix, two of the hottest markets for development in recent years, saw rents drop 5.6% and 4.5% year-over-year in Q3, respectively. Annual rents dropped 4.7% in Las Vegas and 3.7% in Atlanta.

Six large metros recorded annual rent increases above 3% during the quarter, almost all of which have seen constrained development recently. The Newark, New Jersey, metro area led the pack with an increase of 4.3%. Cincinnati, Milwaukee, Chicago, Boston and Kansas City also experiencing higher rents.