April 4 (Bloomberg) -- The average asking rent for U.S. apartments rose 1 percent in the first three months of 2008, the 24th consecutive quarterly gain, as the U.S. housing slump deterred people from buying homes, according to real estate research firm Reis Inc.

San Francisco had the most rapid rental growth at 11.1 percent, followed by San Jose, California, at 8.9 percent, New York at 8.8 percent and Seattle at 7.8 percent, New York-based Reis said today in a statement. The national vacancy rate rose 0.3 percentage point to 5.9 percent.

The U.S. housing slump has entered its third year with plunging sales and prices and rising foreclosures. Prices fell in 21 cities in January, real estate data company Radar Logic Inc. reported yesterday, and foreclosures rose to a record at the end of 2007, the Mortgage Bankers Association said last month. California led all states in foreclosure filings last year, according to RealtyTrac Inc.

``People see a potential for prices to fall further, credit standards are tighter and they have to make a larger down payment,'' Sam Chandan, chief economist at Reis, said in an interview. ``People don't feel confident timing the bottom of this thing.''

A deteriorating housing market beset by stricter loan terms and falling home prices is the ``dominant driver'' pushing people to rent apartments, Chandan said in a statement.

The last time rents fell was the first quarter of 2002, when they declined by 0.2 percent, according to Reis.

New York had the highest average rent at $2,790 a month, followed by San Francisco at $1,801, Fairfield County, Connecticut, at $1,759 and Boston at $1,620, Reis said. The average asking rent for the top 79 U.S. apartment markets was $1,036.

New York also had the lowest U.S. vacancy rate at 2.2 percent, followed by Long Island at 2.8 percent, Central New Jersey at 3.2 percent and San Jose at 3.5 percent, according to Reis. Northern New Jersey, San Diego and Los Angeles ranked fifth, sixth and seventh.

``Sunbelt cities'' such as Jacksonville, Palm Beach and Miami in Florida and Phoenix and Las Vegas had higher vacancy rates because condominiums built for home ownership are being leased instead to renters, Chandan said.

``They're competing directly'' with apartment buildings of 40 units or more, the kind of property primarily tracked by Reis, he said.

Memphis, Tennessee, had the nation's highest vacancy rate at 10.1 percent, followed by Columbia, South Carolina at 9.5 percent, Jacksonville at 9.4 percent, Colorado Springs, Colorado, at 8.9 percent and Phoenix at 8.7 percent, Reis said.

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net

Last Updated: April 4, 2008 00:00 EDT