Corporate landlords are benefiting from the worst rental-housing shortage in more than a decade as construction trails demand and more Americans opt to lease rather than buy.

There’s an undersupply of single-family houses and apartments to rent for the first time since 2001, according to an analysis by Frank Nothaft, chief economist at mortgage buyer Freddie Mac, based on available inventory and historic vacancy rates. The deficit in the third quarter was about 350,000, the most in records dating back 14 years.

The shortage is giving the upper hand to institutional investors who spent more than $25 billion since 2012 buying single-family homes to rent. While the market for apartments has been in favor of landlords for five years, owners of houses are now able to increase rents and reduce turnover to boost profits.

“It’s that supply-demand equation that allows us to get aggressive about raising rents,” Stephen Schmitz, chief executive officer of American Residential Properties Inc., a landlord with more than 8,500 homes, said at an investor conference this month. “Three years ago, you would go to raise somebody’s rent and they could say, ‘I’ll go down the street and pay $100 less than I’m paying you now.’ But today they can’t because all those houses down the street are occupied.”

The U.S. rental-vacancy rate fell to 7.4% in the third quarter, according to Census Bureau data. The market is considered balanced, with neither landlords nor tenants having the upper hand when it comes to rents, at a vacancy rate of 8.2%, based on the average from 1994 through 2003, according to Freddie Mac’s Nothaft.

The housing surplus peaked at almost 2 million units, including 1.2 million rentals, in the third quarter of 2009, when foreclosures were soaring and years of speculative construction led to a glut of empty houses.

“The surplus of vacant housing has shrunk over the last few years because there has been household growth and limited new construction,” Nothaft said in a telephone interview. “In most markets and in the national data, what we’ve observed is that rents have been rising faster than inflation.”

Rents on all single-family homes and multifamily units are expected to climb 3.5% next year, compared with a 2.5% increase for home purchase prices, according to estimates this month by Zillow Inc. Chief Economist Stan Humphries. The U.S. inflation rate was 1.3% in November, with a goal of 2% set by the Federal Reserve.

Wall Street-backed landlords already are enjoying higher rents for single-family homes in markets hit hardest by the housing crash, where they first started buying in bulk.

The average monthly rent for a three-bedroom home in Phoenix surged more than 9% this year to $1,158, data from Westminster, Colo.-based RentRange LLC show. Houses now lease about 10 days faster than apartments, according to a report from the Center for Real Estate Theory and Practice at Arizona State University.

In Las Vegas, rents on houses rose more than 3% to a median of $1,248 in the 12 months through November, according to RentRange. In Orlando, Fla., they climbed 5% the same month to $1,294.

A reviving job market is driving household formation and fueling demand for homes faster than builders are delivering them. In the Orlando area, for example, 56,000 jobs were added in the 12 months through October, benefiting landlords such as Aaron Edelheit, chief executive officer of Atlanta-based American Home, a rental company with 2,500 houses, including about 200 in central Florida.

“They’re not producing many entry-level homes,” he said in a telephone interview. “That’s what creates housing shortages, and it’s going to drive up the price of rents.”

Raising rents is likely to become a higher priority for institutional single-family landlords next year as they get a better grip on operations and how higher rates affect their pace of leasing, said Anthony Paolone, an analyst with JPMorgan Chase & Co. who follows real estate investment trusts including American Homes 4 Rent and Silver Bay Realty Trust Corp.

Investors have positioned themselves to house some of the former owners of 5 million homes lost to foreclosure since the real estate crash, according to research company CoreLogic Inc. Many of those former owners prefer houses over apartments because they want more space for their children and pets. Landlords also are getting a boost from some of the 75 million millennials — 18-to-34-year-olds — who are starting out as renters rather than buyers.

The typical family renting a house from American Homes 4 Rent, an Agoura Hills, California-based REIT with more than 30,000 single-family homes, is in their mid-thirties with an annual income of $80,400, enough to afford to buy if they wanted to, according to CEO David Singelyn.

“Many of these kids saw their parents lose their home, and they’re a little bit disillusioned,” Singelyn said at the Information Management Network Single Family Rental Investment Forum in Scottsdale, Ariz., earlier this month. “How long will that last? I don’t know. But today there’s a significant movement to becoming a renter nation as opposed to an owner nation.”

Those tenants often pay a premium to rent from new firms like American Homes 4 Rent, which mostly owns houses less than 12 years old near good schools and provides better service than mom-and-pop landlords, Singelyn said. They also move less often, with 68% of tenants opting to stay in the most recent quarter when their lease came up for renewal, compared with less than 50% for apartments, he said.

Blackstone Group LP’s Invitation Homes, the largest single-family landlord, with more than 46,000 properties, as of Sept. 30 raised rents an average of 1.8% to $1,474 from a year earlier on 3,200 homes that were financed through the industry’s first mortgage-backed security deal, according to Kroll Bond Rating Agency.

“We’ve seen strong demand for our homes in all 14 markets we operate,” said Denise Dunckel, a spokeswoman for Dallas-based Invitation Homes. “That’s just an indication that there’s a large market that likes the flexibility that renting provides.”

American Homes 4 Rent raised rents 3% on renewals and 4% for new tenants in the third quarter, Singelyn said during a Nov. 3 conference call. American Residential Properties increased rents an average of 3.4% from a year earlier on renewals, while Silver Bay’s rents rose 3% on renewals.

The U.S. economic recovery has been an uneven one. Overall, the recent numbers look great. The Bureau of Labor Statistics announced U.S. employers added 288,000 jobs in June. The unemployment rate fell to 6.1%, the lowest it has been since the financial crisis peaked in the fall of 2008. A total of 1.4 million jobs were added in the past six months, which marks the best showing since 2006. The stock market has continued its meteoric rise, with the Dow Jones topping 17,000 for the first time on the news.

But the news is not great everywhere. Unemployment remains stubbornly high in some areas, with a dozen metro areas still mired in double-digit unemployment — dozens more if you include the underemployed. Income growth has been almost nonexistent over the past five years, with more than half of the metropolitan areas in the U.S. showing negative real income growth.

Forbes crunched the numbers on every metro area to figure who has the best and worst business climates. The result is our 16^th annual look at the Best Places for Business and Careers.

Raleigh, N.C., ranks first this year, moving up from third in 2013. The North Carolina capital previously ranked first in 2011 and had a three-year run in the top spot from 2007 to 2009. It is the only East Coast city that made the top 10.

Fueling Raleigh’s consistent results are business costs that are 18% below the national average, and an adult population where 42% have a college degree, the 12^th best rate in the U.S. (30% is the national average). Raleigh is home to North Carolina State University and nearby schools include Duke University and the University of North Carolina at Chapel Hill. The area’s appeal has led to a strong inflow of new residents to the city, which boasts the sixth fastest net migration rate over the past five years.

Research Triangle Park continues to fuel significant development in the area. The park is located at the core of the Raleigh-Durham-Cary Combined Statistical Area, and it is the largest research park in the country. It features roughly 170 companies that employ 39,000 full-time, mostly high-tech workers. There have been 1,800 start-up companies created at RTP since 1970.

Networking giant Cisco Systems CSCO -2.65% announced plans last month to add 550 jobs in RTP by the end of 2017, in addition to the 4,600 already in the area. “By expanding our presence and hiring the best talent, we will continue developing technology solutions that will enable the Internet of Everything and fuel innovation here in RTP,” said Cisco President Gary Moore in a statement announcing the news. Other top employers in the park include IBM IBM -0.04%, GlaxoSmithKline GlaxoSmithKline, Fidelity Investments Fidelity Investments, Biogen Idec BIIB +0.73%, Credit Suisse and BASF BASF.

Raleigh also prospers from small businesses facing low regulatory hurdles compared to other cities. Projected annual job growth for the Raleigh area is 3.7% through 2016, which ranks seventh best among the 200 biggest metro areas (see “Naples, Austin Head List Of Best Cities For Job Growth”).

Last year’s top-ranked city, Des Moines, drops back to second. The Iowa capital is a financial services hub with major employers including Marsh, Nationwide, Principal Financial and Wells Fargo WFC +0.78%. High tech firms have also been making their way to the heartland to take advantage of Iowa’s low energy costs. Microsoft MSFT +0.42% announced plans in April to invest $1.1 billion in a new data center, which brings the company’s total investment in West Des Moines to nearly $2 billion. Facebook has four data centers in the area.

Des Moines employers and employees can take advantage of business costs 17% below the U.S. average and living costs that are 6% lower than the national average. The city’s $38 billion economy is projected to grow at a robust 4% annual rate over the next three years, according to Moody’s Analytics.

Provo, Utah, ranks third overall this year and leads a trio of Utah places near the top with Salt Lake City at No. 8 and Ogden ranked No. 11. Brigham Young University brings a stabilizing presence to the $19 billion Provo economy. Job growth for Provo was tops in the country last year, and it ranks seventh best over the past five years. Global multilevel marketing firm Nu Skin Enterprises, which is based in Provo, opened a new $100 million headquarters in the city in October.

Rounding out the top five are a pair of Colorado metro areas: Denver and Fort Collins. Both feature highly educated workforces and strong net migration patterns. Denver’s business and living costs are higher than any other city in the top five, but its diverse economy and significant outdoor recreational options continue to attract educated, young professionals. Many high-tech companies including Hewlett-Packard HPQ +0.82%, Intel INTC -0.44% and AMD have relocated operations to Fort Collins in part to take advantage of the resources of Colorado State University and its research facilities. Fort Collins has the highest level of high school attainment (95% of the adult population) and ranks ninth best for college attainment at 45%.

To gauge the best places for business in the U.S., we rate the 200 largest metro areas on a dozen factors related to jobs, costs (business and living), income growth, quality of life and education of the labor force. Forbes uses data from economic research firm Moody’s Analytics, the U.S. Census and demographer Bert Sperling, who runs Sperling’s BestPlaces (click here for a more detailed methodology).

Atlantic City brings up the rear for the second straight year, ranking No. 200 (see “Atlantic City Heads Worst Cities For Business And Careers”). The New Jersey gambling and convention destination was hammered by the economic downturn and increasing gambling options in surrounding states. AC gaming revenues are down 45% since their 2006 peak. Potentially four of the city’s 12 casinos will close in 2014. There has been a steady net migration out of the area since 2007 and it is expected to continue through at least 2016.