A For Rent sign is shown in front of a rental property on 4 St SW in Calgary, Alta on Thursday November 24, 2016.

Rapid construction of new apartments at a time of high unemployment in Calgary has left a raft of rental housing empty, spiking the apartment vacancy rate to levels not seen in a generation, a new report says.

More than 2,500 apartment units were empty in October, up by more than a third over last year’s volumes, pushing the vacancy rate to seven per cent, according to the Canadian Mortgage and Housing Corp.

The rate, up from 5.3 per cent in October 2015, rose for the third year in a row. It’s now the highest it has been in 25 years, the national housing agency said in its annual rental market report.

“The vacancy rate has moved well above historical averages largely due to a rise in supply,” Richard Cho, analyst with the housing agency, said in a statement.

Calgary was home to 36,500 apartments last month, up by 1,300 units or nearly four per cent over year-ago levels. It was the biggest annual gain in 22 years and the third straight year of expansion in the rental market.

The construction boom came as oil prices remained persistently low, sparking widespread unemployment. The city’s jobless rate hit double digits in October for the first time since 1993, rising to 10.2 per cent.

“Economic conditions in Calgary have deteriorated in 2016 as the price for oil has remained relatively low, holding back some gains in rental demand,” the housing agency said in its report. “Job losses have spread beyond the energy sector and into other areas of the economy.”

The agency notes the city’s economy shed 21,000 jobs at the end of September, compared to levels from a year earlier, representing a 2.6 per cent decline in total employment.

Calgary’s vacancy rate was one of the highest among Canada’s major cities, surpassed by Edmonton (7.1 per cent), St. John’s, N.L. (7.9 per cent), Saint John, N.B. (8.5 per cent) and Saskatoon (10.3 per cent).

The average vacancy rate in the country’s 34 larger centres was 3.4 per cent last month, up marginally from 3.3 per cent a year earlier.

In several communities the vacancy rate was less than one per cent, including Vancouver (0.7 per cent), Kelowna (0.6 per cent) Victoria (0.5 per cent) and Abbotsford-Mission (0.5 per cent), which led the country with the lowest rates.

In Calgary, higher apartment vacancies have pushed prices lower while giving tenants much more choice.

According to RentFaster.ca, a Calgary online database of rental housing, prices have fallen by 25 per cent to 35 per cent, depending on the housing type, from a peak in July 2014.

“We still haven’t hit that bottom in rental prices,” said Mark Hawkins, who owns the website.

RentFaster has seen record-high volumes of both online views of its listings and emails to landlords, which does not indicate there are more renters in Calgary — but that renters are shopping around, Hawkins said.

“They’re looking for those good deals; they’re looking for incentives,” he said. “They’re contacting landlords to see if there’s any more budge on price.”

In Calgary, many renters have delayed buying homes due to the bleak outlook, while international migrants have been snatching up apartments, but these gains disappeared under broader forces of oversupply and weak demand, the Canadian Mortgage and Housing Corp. said.

Making matters worse for apartment landlords, real estate investors have been renting more of their condos in a flagging market, giving tenants more options. Rental condos tend to be newer with better finishes and more amenities, such as heated underground parking and fitness centres.

Landlords have been forced to cut rents and offer incentives to attract and keep tenants. Renters paid an average of $1,260 for a two-bedroom apartment last month, down 5.5 per cent from the same month last year, when they paid $1,330, according to the national housing agency.