Reis Inc., a commercial real estate data provider, report that only 7,342 apartment units were completed in the 78 primary and secondary metro markets it covers during the first quarter 2012, the lowest figure recorded since the firm began publishing quarterly data in 1999. Due in part to low supply, apartment vacancy in the top metro markets declined to one of the lowest levels ever registered by the firm.

But recent increases in U.S. multifamily construction starts and building permits suggest that supply is likely to accelerate over the next 18 to 24 months. Last year, developers started construction on 167,300 apartment units, according to data published by the Census Bureau, up 60.4 percent from 2010. The increasing trend continued in the first quarter 2012 as starts rose 27.2 percent year-over-year and 4.8 percent sequentially to a seasonally-adjusted annual rate of 196,000 units. Similarly, the number of multifamily unit building permits issued increased 10.1 percent sequentially to a seasonally-adjusted annual total of 228,000, the highest figure registered since the third quarter of 2008.

Increased start and permitting activity notwithstanding, over-building is not yet a serious concern. Start and permit levels remain comfortably below long-term averages. By way of comparison, construction starts and permitting averaged about 262,100 and 298,900 multifamily units per year, respectively, from 1990 to 2008.