Pointing to the latest Equity Financing and Debt Financing indices, Obrinsky says debt and equity markets have become “more discerning in terms of what deals they are ready to take on, including the continued slowing of available construction loans.” That's the case even as the Mortgage Bankers Association reported last week that 2015 volume for multifamily mortgages was up 28% year-over-year to $249.8 billion. Obrinsky adds, though, that “despite the softening due to the new development focus on class A apartments, the overall fundamentals for apartments remain stable, indicated by the strong demand for Class B and C properties.”

In a REIT summary issued this past Friday, Capital One Securities analysts Chris Lucas and Thomas Lesnick note that the SNL US Multifamily REIT index has produced a -7.17% total return over the past three months, underperforming the RMS's -7.04% by 13 basis points. “Fundamentals clearly continued to decelerate” in Q3, the analysts write.

Yet Lucas and Lesnick write that at this point in the current year, the big question isn't what '16 will look like overall, “but rather where companies will establish guidance” for next year. “We have generally revised 2017 estimates lower for the sector, as has most of the Street over the last couple of months. With the sector's median P/NAV at 88.2% compared to the rest of the REIT industry at 93.6%, we suspect that current valuation already reflects low expectations.”

That being the case, AVB got the sector's Q3 earnings season off to an upbeat start with an earnings beat. The Arlington, VA-based apartment REIT's funds from operations for Q3 increased 4.5% to $2.11 per share, topping the consensus estimate by three cents per share. Earnings per share and core FFO also were up from the year-ago period, and AVB attributed the gains to an increase in NOI from newly developed and existing operating communities, partially offset by an increase in the average shares outstanding.