The already-weak apartment market just got weaker, according to Torto Wheaton Research. The Boston-based research arm of CB Richard Ellis reports that more than 80,000 permits for properties with five or more units were issued nationwide during the second quarter alone.

"Developers know that they can make money only by developing, and it is rare for them to react quickly to the changing market conditions," says Torto Wheaton economist Gleb Nechayev.

Because of this, says Nechayev, they end up in what he calls "the developer’s dance": where there is demand for only one project, two or more will rise due to competition for favorable financing and faster completion. There’s a demographic factor, too. Developers expect that strong growth among younger households will boost the apartment market in the second half of this decade.

These two factors, says Nechayev, are fueling a building binge that will only delay a market recovery. While net absorption remains positive, it still isn’t catching up with supply and isn’t having a "tangible effect" on market fundamentals.

The new supply isn’t coming on line at the same rate everywhere. In fact, there has been a construction slowdown in markets such as Austin, Atlanta, Charlotte and Denver. But markets like Houston, Tampa, Fort Worth and Los Angeles saw a robust increase in construction activity.

"Occupancy in Houston has dropped by 60 basis points and is now standing at 90.6% —260 basis points below its level a year ago," adds Nechayev. "It is nice to know that the laws of supply and demand are still at work!"