At a glance
- Apartment values fell 4.6% from a year earlier in the same quarter and 6.2% at an annualized rate between the second and third quarters, MSCI data show.
- Family offices and RIA model portfolios holding apartment REITs or closed-end value-add funds are left asking whether exit cap assumptions have moved with MSCI's third-quarter 5.9% cap rate.
- Individual apartment sales, a cleaner read for allocators, fell 12% year over year to $34.3 billion, the second straight quarterly decline, MSCI data show.
Multifamily sales rose 139% in the third quarter, the highest on record, and MSCI attributes the gain to one deal rather than broad confidence in apartments, Multifamily Dive reported.
Apartment values fell 4.6% from a year earlier in the same quarter and 6.2% at an annualized rate between the second and third quarters, MSCI data show. "Here, volume is rising while prices fall, which points to a single transaction rather than broader confidence in the apartment sector," MSCI said.
Family offices and RIA model portfolios holding apartment REITs or closed-end value-add funds are left asking whether exit cap assumptions have moved with MSCI's third-quarter 5.9% cap rate. A fund mark or acquisition model built on the headline quarter leans on one merger.
Individual apartment sales, a cleaner read for allocators, fell 12% year over year to $34.3 billion, the second straight quarterly decline, MSCI data show.
MSCI's hedonic measure put third-quarter cap rates at 5.9%, 140 basis points above the first quarter of 2022 and 20 basis points higher than a year earlier. The 10-year Treasury moved above 5% during the quarter.
Owners say the financing backdrop is making underwriting harder to finish. "The last 60 days have been difficult, and from our end makes it difficult to pin down where we think exit caps are going," American South Capital Partners executive vice president Tyler Epps told Multifamily Dive. Tyler Chesser, co-founder and managing partner of CF Capital, said cap rates have moved out since the September Federal Reserve meeting and that sellers have been slow to accept it. "Historically it takes a few quarters for seller expectations to catch up to the market," he said. "Until they do, the bid-ask gap means a lot of deals stall, get retraded, or die."
MSCI cautioned against treating the quarter as a turn in the apartment cycle. Chesser expects closing the bid-ask gap to take a few quarters. MSCI's fourth-quarter volume will be the first test of what the market does without Vivmark in the total.
Volume jumped 139% while prices and individual sales fell
Q3 2026 change from a year earlier; individual sales in $B; cap rate in %
The last 60 days have been difficult, and from our end makes it difficult to pin down where we think exit caps are going.Tyler Epps, executive vice president at American South Capital Partners
Reported by the Sectors desk from Multifamily Dive, citing MSCI. Published . Corrections