The National Association of Realtors (NAR) is forecasting that the vacancy rate on multifamily dwellings will fall to 4.2% this quarter compared to 5.6% a year ago as high demand outstrips supply.

Moreover, rents will likely increase by 4.1% this year compared to 2.2% in 2011, the trade group predicted. “Sharply higher demand for apartments is causing rents to rise at faster rates,” NAR chief economist Lawrence Yun said.

The NAR is forecasting that rents will jump another 4.4% in 2013.

The rise in rental rates is being fueled by the limited supply of apartments and the lagging construction of new units.

Multifamily builders completed only 37,700 units in 2011. The NAR estimates completions will hit 79,850 by the end of this year, and 148,600 in 2013.

The 20-year average for multifamily completions is 237,000 units per year.

One NAR economist noted that tight credit standards also contribute to the crowded rental market. Many renters who would like to escape high rents can’t qualify for a mortgage. The high cost of housing in many markets where renters want to live is another barrier to homeownership.

Although the NAR sees rents increasing, a recent report from the PNC Real Estate noted that tenants are starting to push back when landlords get too aggressive on prices.

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