Apartment volume fell for the fourth straight month in May—dropping 27% year over year, to $8.4 billion, according to Real Capital Analytics.

Apartment Transaction Volume
Source: Real Capital Analytics
Source: Real Capital Analytics

All property segments are slowing down. “Transactions involving portfolios and entity-level deals led the decline in May, with volume down 51% year over year on sales of $1.1 billion,” RCA wrote. “Still, this segment of the market is not behind the overall downward trend of recent months. Single-asset deals were down an average of 20% year over year in each of the last three months.”

Despite this decline, deal volume for 2016 to date is still 2% higher than in the same five months of 2015.

The average cap rate was 5.5%, down from 6.5% in May 2015. “Cap rates are now at record low levels and, despite investor confidence in the demographic demands for apartment units, they are simply being far more cautious in their acquisitions of properties,” RCA wrote.

That reason is simple. As cap rates have fallen, interest rates have risen. In May 2015, fixed-rate loans for apartments stood at 3.9%, giving investors a 210-basis-point spread. As mortgage rates rose to 3.9%, cap rates fell to 5.5%. “There is just less of a cushion now, which slows the pace of sales,” RCA wrote.