Following an extraordinarily high level of apartment transaction volume in 2016, deal volume fell by a staggering 63% year over year (YOY) in January, on sales of $6.7 billion, according to the most recent US Capital Trends report by RCA Capital Analytics. Last month's multifamily deal volume is, so far, consistent with volume figures recorded in January 2014.

The 91% YOY drop in portfolio and entity-level transactions, from $8.6 billion in January 2016 to $769 million in January 2017, accounts for a large portion of the overall decline. Single-asset sales also fell, 37% YOY, on a volume of $6.0 billion, following a 27% YOY drop in December. Single-asset slowdowns on this scale suggest “a growing sense of caution and uncertainty in the market,” according to RCA, but, thus far, the deceleration hasn't had an effect on property pricing.

Average cap rates fell to 5.5% last month, down 30 basis points (bps) from January 2016. Mid- and high-rise cap rates fell to 4.8%, down 20 bps, while garden-apartment cap rates fell to 5.6%, down 40 bps YOY.

Private investors made up the largest share of apartment market investors in 2016, by far, at 61%, up from 54% in 2015. Cross-border investors’ market share fell back, from 13% in 2015 to just over 2014's levels. (The sector’s sharp rise and fall in market share stems from Stuyvesant Town and other massive portfolio deals in 2015, notes RCA.)

Relative market shares in 2016 mirrored shares seen in 2014 for the most part, apart from REITs, which were 2016’s largest net sellers. In general, REITs’ dispositions are twice the size of their acquisitions, but the acquisitions made tended toward the expensive side last year: The trusts purchased property at an average price of $219,000 per unit and $54 million per deal; the market average stands at $146,000 per unit and $20 million per deal.

Institutional buyers tended to pay the lowest cap rates in 2016, at 5.4%, compared with the 5.7% market average. Higher-priced mid- and high-rise assets made up 37% of institutional activity, compared with 34% in the market overall.