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Millennials driving hot rental market: Report

Millennials are the driving force behind the strengthening apartment rental market and the lackluster housing numbers, according to a new report by Auction.com.

"We're not seeing much evidence of first-time homebuyer coming into the residential market. Instead they're becoming renters at a higher percentage than historically," Rick Sharga, Auction.com's executive vice president told CNBC's "Street Signs."

Read MoreRents skyrocket well beyond wages

Apartment For Rent
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The apartment market's recovery has surged ahead of other real estate sectors, the report found. In fact, it said, vacancies are between 3 and 4 percent in most major U.S. cities, and there's been a surge of new construction due to "healthy" rent growth.

Read MoreHousing recovery? Not until 2018

"This generation has decided just to delay its entry into the home-buying market. They've delayed getting married, having kids, and they have that looming student debt load that they have to deal with from their college loans," Sharga said.

He thinks the apartment sector will continue to be strong for the foreseeable future.

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—CNBC's Stefanie Kratter contributed to this report.