Obrinsky notes that the “the overall fundamentals for apartments remain stable,” indicated by strong demand for class B and C properties.

WASHINGTON, DC—Going into multifamily REITs' third-quarter earnings season, which began late Monday afternoon with a report from AvalonBay Communities (AVB), there have been signs of softening in apartment markets nationally. The National Multifamily Housing Council said last week that all four of the indices in its latest quarterly survey came in below the break-even level of 50, while economists and analysts alike are anticipating a moderation of growth in 2017.

NMHC's Quarterly Survey of Apartment Market Conditions showed the Market Tightness index at 28, its lowest level since July 2009, Sales Volume declining to 42 from 50 in Q2, Equity Financing reaching a seven-year low at 33 in its fourth consecutive quarterly decline and Debt Financing decreasing sharply from 62 last quarter to 38 in Q3. “The growing supply of new apartments, primarily in the class A space, appears to have finally reached a level to slow the historically high rent growth,” says Mark Obrinsky, SVP of research and chief economist at NMHC.

Obrinsky's conclusion dovetails with the results of the Urban Land Institute's latest semi-annual consensus forecast of the next three years. Among other findings, the survey of 51 real estate economists says that although annual rental growth is expected to remain above the 20-year average 2.8%, it's anticipated to moderate to 3.5 percent for this year, 3.0% in '17 and 2.9% in 2018.