Just when it looked as if transactions were picking up, along came May. Apartment transactions fell 46 percent to $481 million from April to May, making it the slowest month ever tracked by New York-based research firm Real Capital Analytics.

“The transaction market is just a fraction of its former self and little has changed since the beginning of the year,” Real Capital writes in the report. “Sales have stalled, the inventory of properties for sale is ballooning, and defaults and foreclosures proliferate.”

Earlier in May, some brokers commented that they felt the sales markets were thawing. Then interest rates rose up to 70 basis points, thwarting deal flow. However, rates have moved back down since then, and Real Capital says that June’s recorded sales have already outpaced the full month of May, though the final tally won’t be released until next month.

Despite May’s horrid numbers, Real Capital’s report actually strikes several optimistic tones. For one, it says the pace of decline in sales is slowing, with apartment sales stabilizing at a 70 percent year-over-year rate. Larger deals are materializing (seven deals over $40 million have gone into contract or closed since late May); new buyers are entering the market; and old investors seem to be returning, according to Real Capital.

Anecdotally, brokers say that another big issue preventing sales—the gulf between buyer’s and sellers’ expectations—seems to be evaporating. “Buyers’ pricing has come back in line with what sellers want,” says Scott Melnick, managing principal of the Transwestern Institutional Multifamily Group (IMG), in Bethesda, Md. “Prices have come down.”

Others see this as well. “A few sellers are coming to the realization that we aren’t going back to where to we were,” says Debbie Corson, a principal at Atlanta-based Apartment Realty Advisors. “They’re starting to say, ‘This is the new reality. We need to accept the new reality, and I’m not going to sell in that environment.’”

Real Capital predicts that prices aren’t likely to rise, even if transaction volume picks up through the summer. So far, the research group says offering cap rates have hovered at about 7 percent. With sellers outnumbering buyers and distressed assets piling up, there’s no upward pressure on pricing. Through May, Real Capital says there have been $9 billion of apartment properties added to the distressed total and a little more than $1 billion have been resolved. The number of apartments in distress was up to $16.8 billion at the end of May, with another $750 million going into default or foreclosure in June.

“As in the housing market, rising sales are being accompanied by a steeper fall in prices, with distressed sales dominating transaction growth,” the report says. “The percentage of distressed sales in the apartment sector is up considerably this year, but still only averages between 10 percent and 15 percent of total volume.”

As distressed assets and other properties sell, brokers hope that will create a baseline for other sales. “As more of them sell, that will create other transactions,” Corson says. “A lot of the problem is that people have been sitting on the sidelines because there are no sales to compare them to.”

Melnick agrees. “As these deals close, you’ll see more people to jump in as buyers,” he says.

If that happens, multifamily brokers and owners may indeed be able to look and see that May represented the trough in sales volume. “I think the second half of the year will be better than the first half,” Corson says.