WASHINGTON, DC—The multifamily sector faltered for the first time in more than two years, as the National Multifamily Housing Council's Quarterly Survey of Apartment Market Conditions fell below the break-even level of 50, indicating a decline over the past quarter. "After an incredible year for the apartment industry, some weakening has appeared, reflecting seasonal patterns along with additional pullback in some markets," says Mark Obrinsky, SVP of research and chief economist at NMHC.

All four indexes in the latest quarterly survey came in below the break-even mark. Market Tightness registered an index of 47, Sales Volume and Equity Financing both came in at 46 and Debt Financing registered 37. The latter registered a 17-basis point decline from October of last year, following a 19-bp increase from the previous quarter; the other quarterly declines were in the single digits. The last time all four indexes slipped below 50 was October 2013.

"2015 was one for the record books," Obrinsky says. "Construction of new apartments rose to the highest level in almost 30 years, while the occupancy rate continued to climb and rent growth accelerated." The year was also a record-setter for investment sales volume: JLL reported Wednesday that multifamily sales reached $139 billion last year, topping 2014's $106 billion by 31%.

Longer term, says Obrinsky, "All signs point to continued strong demand for apartment residences. With new supply finally approaching the level needed to meet new demand, we may well see some moderation in both occupancy and rent growth."

This quarter's special question focused on year-to-year rent growth. Fifty-one percent of respondents said asking rents of class A and B apartments were 3% to 4.9% higher than a year ago. One-quarter of respondents reported asking rents were up by 5% or greater year over year, while 18% thought rents were up by 0.0 to 2.9% from the year-ago period. Just 4% said rents were lower today than they were a year ago in the markets where they operate.