Average Orange County apartment rents are projected to climb to $1,806 a month by the middle of 2016, USC economists predicted.

At the same time, vacancy rates are projected to drop over the next two years as demand for rentals continues to climb.

The USC Casden Multifamily Forecast reported last week that rising rents and falling vacancy rates are a continuation of trends for the past four years.

As of June, the report said, the average rent for an Orange County apartment was $1,663, Southern California’s second-highest rent. Apartment rents here increased 3.2 percent on a year-over-year basis.

According to the report, average rent increased in all 10 O.C. “submarkets,” and vacancy rates decreased across the board.

“Renters’ incomes are stagnant,” observed Richard Green, director of the USC Lusk Center for Real Estate. “So affordability continues to worsen.”

While demand is on the upswing, apartment construction isn’t keeping pace. According to the report, Orange County apartment developers completed about 1,800 new multi-family housing units in the year ending in June, down 44 percent from the number of units completed the previous year.

South Irvine had the county’s fastest growing apartment rents, the report said: Rents there jumped 9 percent in the year ending in June.

Newport Beach rents increased 8.7 percent, the second-fastest growing rate, while the county’s most stable rents were in the east Anaheim-Orange “submarket,” where monthly rates were up 2.4 percent.

As of June, the countywide vacancy rate decreased to 3.6 percent and is projected to fall to around 3 percent by mid-2016.

Green said the only thing that could dampen rising apartment rents would be if more renters doubled up or moved elsewhere. If that happened, “vacancies could increase and drive down rents,” he said.

The report said that rising rents and falling vacancy rates will continue across the region. Specifically, the report said:

• Los Angeles County, which had the region’s highest average rent at $1,716 a month, is projected to see monthly rents rise 8.2 percent by mid-2016, to $1,857 a month.

• Average rents in the Inland Empire are projected to rise 9.9 percent, to $1,246 a month, by mid-2016.

• San Diego rents are projected to rise 6.9 percent, to $1,601 a month.

• As of June, Victorville had the region’s lowest monthly apartment rent, averaging $797 a month. Santa Monica had the highest apartment rent in the region, at $2,618 a month.

Contact the writer: 714-796-7734 or jcollins@ocregister.com