AvalonBay Communities, Inc. (AVB Quick QuoteAVB - Free Report) , a leading real estate investment trust (REIT) specializing in the development, acquisition and management of multifamily properties, is set to announce its fourth-quarter and full-year 2025 results after the closing bell on Feb. 4.

In the last reported quarter, this residential REIT delivered a negative surprise of 2.14% in terms of core funds from operations (FFO) per share. The quarterly performance reflected weaker-than-expected top-line growth.

Over the past four quarters, AvalonBay’s earnings surpassed the Zacks Consensus Estimate on two occasions for as many misses, the average negative surprise being 0.36%. The graph below depicts the surprise history of the company:

AvalonBay Communities, Inc. Price and EPS Surprise

AvalonBay Communities, Inc. price-eps-surprise | AvalonBay Communities, Inc. Quote

As we approach the release of AvalonBay's fourth-quarter 2025 earnings report, it is important to examine how this residential REIT is likely to have performed amid the current market conditions.

US Apartment Market in Q4

Apartment REIT fundamentals softened in fourth-quarter 2025 as the sector normalized from the exceptional demand of recent years. According to the RealPage report, the market recorded net move-outs of about 40,400 units during the quarter, marking the first seasonal pullback in three years. Full-year absorption totaled just over 365,900 units, signaling a return toward long-term leasing trends rather than a demand collapse.

Supply remains the primary pressure point. Approximately 409,500 units were delivered in 2025, including about 89,400 in the fourth quarter, keeping competition elevated despite a sequential slowdown in completions. As a result, occupancy slipped to 94.8%, while effective asking rents declined 1.7% quarter over quarter. Rents declined 0.6% in calendar 2025, extending the year-over-year downturn for a second consecutive quarter. Concessions expanded meaningfully, with more than 23% of units offering incentives averaging 7%, reflecting REITs’ focus on protecting occupancy and cash flow.

Market performance remains uneven. Supply-heavy Sun Belt markets such as Austin, Phoenix and Denver experienced the steepest rent pressure, while coastal and tech-oriented metros, including New York and San Francisco, continued to post rent growth due to tighter supply.

Factors to Consider Ahead of AVB’s Q4 Results

AvalonBay has not been spared from the current market backdrop, as its near-term outlook has moderated amid decelerating rent growth, rising expenses and softer demand, prompting reductions to its 2025 revenue, net operating income (“NOI”) and core FFO forecasts. That said, a solid balance sheet, limited upcoming supply in core markets and a meaningful development pipeline position the company for longer-term stability as operating conditions normalize.

In an investor relations update released in December, AvalonBay lowered its core FFO per share growth outlook to 2.2% from the prior guidance of 3.5%. The same-store residential NOI growth has been reduced to 2% from the earlier 2.7% owing to lower revenue growth of 2.5% (down from 2.8% expected earlier) and higher expense growth of 3.8% (up from 3.1% guided earlier).

The above outlook has been triggered by lower-than-expected job growth, leading to revenue moderation in the late third quarter of 2025 and into October. The company has been witnessing higher operating costs in the second half.

AvalonBay pointed out that its same-store revenues started to moderate in August, with trends becoming more vivid in September and October. Softening occupancy, lower like-term effective rent change driven primarily by new move-in rent change and bad debt improvement at a pace modestly below the prior forecast, were the factors contributing to the same. The Mid-Atlantic and Southern California led the way to the majority reduction in revenue growth expectations, followed by expansion regions.

Projections for AVB

The Zacks Consensus Estimate of $768.33 million for fourth-quarter revenues indicates a 3.75% year-over-year increase. The consensus mark for same-store economic occupancy is pegged at 95.65% for the fourth quarter.

Before the fourth-quarter earnings release, the company’s activities were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly core FFO per share has been revised 2 cents south to $2.84 over the past month. However, it implies year-over-year growth of 1.43%. 

For full-year 2025, the Zacks Consensus Estimate for core FFO per share has been revised 3 cents downward over the past month to $11.24. However, the figure indicates a 2.09% increase year over year on revenues of $3.04 billion.

Here Is What Our Quantitative Model Predicts for AVB:

Our proven model does not conclusively predict a surprise in terms of FFO per share for AvalonBay this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

AvalonBay currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of -0.33%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the residential REIT sector — Equity Residential (EQR Quick QuoteEQR - Free Report) and UDR Inc. (UDR Quick QuoteUDR - Free Report) — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Equity Residential, scheduled to report quarterly numbers on Feb. 5, has an Earnings ESP of +0.64% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

UDR is likely to report quarterly numbers around Feb. 4. It has an Earnings ESP of +0.74% and carries a Zacks Rank of 3 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.