Rental apartment demand up in some US markets -Reis

By Ilaina Jonas

NEW YORK, Oct 2 (Reuters) - The withering U.S. housing market and tougher mortgage standards strengthened demand for apartments to rent in some areas in the third quarter, while in other markets it stepped up competition for tenants, real estate research firm Reis said.

"National results are healthy, but not overwhelming when you consider the seasonal strength of the third quarter," Reis chief economist Sam Chandan said in a statement.

Nationwide, the U.S. apartment market remained sturdy, as the vacancy rate fell 0.20 percentage point from the previous quarter to 5.6 percent.

Meanwhile, effective rent -- the amount paid net of any free months or other incentives -- rose 1.4 percent from the previous quarter to $964 per month, the biggest quarterly increase since the third quarter of 2006, according to Reis.

"The interesting story is in the conversion markets -- Las Vegas and Phoenix are showing signs of weakness now, as well," Chandan said.

Las Vegas saw apartment vacancies rise 0.50 percentage point to 5.3 percent and Phoenix saw the rental vacancy rate rise 0.40 percentage point to 7.8 percent, as investors and second-home buyers sought to rent their condominiums and homes rather than sell them at a loss.

Other once-hot home buying markets, such as Fort Lauderdale and Orlando in Florida, saw vacancies spike.

Orlando's vacancy rate rose 0.50 percentage point to 6.8 percent. Fort Lauderdale saw the greatest increase, 0.60 percentage point to 4.6 percent, and the weakest rent growth, flat from the prior quarter, Reis said.