After a booming six-year apartment rental market, which hit a low vacancy rate of 4.2% in 2014 and 2015, with a peak of rental prices reaching more than 5% late in 2015, the current year seems to be marking a slowdown, especially in major U.S. cities.

While this is not yet indicating a major reversal in the switch from condos and housing ownership, a balance seemed to have been reached between unfulfilled demand and apartment supply shortage. The first-quarter 2016 building climbed by just 20,000 units, in comparison to the last five-year average of 40,000 during similar periods.

What may face the apartment surge with greater concern going forward is the 1 million apartments, throughout the country, in various stages of construction development. This comes on top of the 900,000 already constructed during the last three years. However, the upturn in vacancy rates during the first half of 2016, as well as the slowdown in effective rent growth, does not yet indicate a reversal of the “red-hot” apartment leasing and rentals. It’s more a matter of supply eventually outpacing demand.

Ironically, the benefits of lower rentals will likely mostly impact the most expensive apartments, which make up the lion’s share of the construction now underway. These seem to be concentrated in New York, San Francisco, Denver and Houston. With high rentals at their peak, the prospective renters or leasers of the most expensive apartments are already beginning to receive concessions, such as a month or more, rent-free, already noted in New York.

Like all types of building booms, the switch to apartment rentals from homeowning may have been overdone. However, as older retirees move back into major cities from suburban locations, together with millennials and generation Xers not willing to take on mortgages, the major shift from homeowning, which spread over the period from post World War II to the beginning of the financial recession in 2008, will not be substantially revived.

While America’s determined population growth is due to continue in the years ahead, the greater mobility of those entering the workforce guarantees that renting-leasing will maintain its prominence in its big cities, and even in some rural areas, in years to come.

Housing growth, export drop

When measuring the strength of the U.S. economy in the past years, the salient factors defining its potential have traditionally been the housing and automotive markets.

This is particularly relevant since America’s $18 trillion, world-leading economy is heavily dependent (by two-thirds) on its vibrant consumer sector. In the past two decades, this positive factor has been supplemented by an ever-strengthening export volume, joining Japan and Germany as world leaders in that important department.

Therefore, it’s ironic that despite this year’s substantial drop in U.S. export world trade, America’s gross domestic product of goods and services has kept on the positive side, even though the 2% average growth has been less than inspiring.

Fortunately, the rebirth of housing to a level approaching the pre-financial crisis period has made up some of those GDP reductions caused by the drop in exports, especially the product type and volumes previously headed for Europe.

The U.S. housing situation, headed for the million unit mark for the first time since the great financial crisis, has been abetted by improved demand, supported by a more generous backup support of Fannie Mae and Freddie Mac.

This has provided greater minimum affordability by a somewhat improving active employment picture and mortgage rates that hover at or below the 4% annualized rate. Even the expectation of slight mortgage rate increases in the foreseeable future will likely have little effect on the improved housing purchase outlook of baby boomers and Generation Xers entering the housing market under current conditions.

While the deteriorating European economic situation shows no sign of improvement, with a possibility of worsening, industrial/technological export shipments at levels previously attained will likely not be reached this year. However, with the U.S. domestic consumer sector picking up a significant segment of the production/manufacturing export shortfall, enough additional revenues will be presented to maintain U.S. GDP growth at or above the 2% level for this year.

Fossil-fuel banking concerns

Although oil prices have struggled back from the 70% price crash absorbed between mid-2014 and the end of 2015, the wide-open financing available to the many productive shales developed during the post-financial crisis has been quickly drying up.

Although this reversal has hit the small to medium high-risk projects the hardest, even fossil-fuel industry majors such as Exxon, Mobil, Shell, Chevron and Conoco Phillips have felt the tightening grip of banks and various financial institutions in expanding fossil-fuel enhancement.

As the United States stands on the edge of leading the world in the development of universal natural gas expansions, as well as liquified natural gas development for use in the chemical industry, practically all these initiatives are being reduced by lack of funding. In fact, as early as the first quarter of 2016, almost $40 billion worth of fossil-fuel prospects have been cancelled or suspended.

Even coal has been rejected by the U.S. Army Corps of Engineers with the cancellation of a proposed $850 million coal-export terminal for the state of Washington. This is due to political pressures exerted by a combination of environmental groups and Indian tribal nations, charging its impact on fishing rights and indigenous property invasion.

While America’s super-abundant coal reserves seem beyond salvage in the future, even to boost U.S. exports, major private pipeline developers are eliciting hostility as well as financial support from regulatory partisans who claim invasion of regional or local property rights.

This potentially fruitful sector of America’s hard-pressed manufacturing and product development growth is currently in increasing danger of being decimated even in maintaining this hard-won segment of industrial revenue growth and employment.