With revenue growth in the first quarter of 2026 and strong fundamentals, executives at AvalonBay affirmed their full-year guidance and expressed optimism about the rest of the year, according to a Q1 2026 earnings report released Monday.

Occupancy remains solid and new market-rate apartment deliveries are expected to stay at historically low levels for the foreseeable future, AvalonBay President and CEO Ben Schall said in an earnings call Tuesday. At the same time, customers are experiencing healthy wage growth, which enables AVB to charge higher rents.

“Turnover remains well below historical norms and even ticked down 50 basis points compared to Q1 of last year, supported by a variety of factors, including a historical low 8% of residents moving out to purchase a new home,” Schall said. “Taken together, these factors give us confidence in the resiliency of apartment fundamentals and in the positioning of our portfolio.”

Schall said lower levels of supply and reduced concessions are expected to be the main performance drivers for the Arlington, Virginia-based REIT in the second half of the year.

Quarterly activity

AvalonBay’s Q1 core funds from operations per share of $2.83 exceeded the company’s outlook, driven by lower expenses, higher development NOI and its $198 million in share repurchases, according to the firm’s presentation. 

Looking ahead, the firm is “in a very strong position” to create value through both developments and share buybacks, said AvalonBay Chief Financial Officer Kevin O’Shea on the earnings call.

“Buybacks and development are both highly attractive to us today, so it's not a binary choice,” said O’Shea. “At current pricing, our stock implies a cap rate in the low 6% range, which makes repurchases attractive and immediately accretive. At the same time, development remains compelling for us with projected initial stabilized yields in the mid 6% range or higher.”

AVB started $188 million in developments during the first quarter, beginning construction on Avalon Saddle River in Saddle River, New Jersey, and Avalon Somerville Station II in Somerville, New Jersey, which will contain a combined 446 units, per the release. 

The REIT sold $341 million in assets in Q1, including Avalon Sunset Towers in San Francisco, Avalon White Plains in White Plains, New York, and Avalon The Albemarle in Washington, D.C. AvalonBay Chief Investment Officer Matt Birenbaum said that part of what drove the firm to sell Sunset Towers was upcoming regulatory upgrades, including seismic and sprinkler retrofits.

Birenbaum pointed to the firm’s developer funding program, which provides capital to third-party merchant builders, noting that those deals can ramp up quickly because the early pre-work is done and the projects are ready and just looking for capital. 

“There's a lot of that business out there right now, most of it doesn't underwrite, which is why you're not seeing start activity pick back up in a meaningful way. And we like that,” Birenbaum said. “We are very consciously trying to take a larger share of what is a shrinking pie of development activity, and we think we're well positioned to keep doing that.”

Per O’Shea, the firm planned roughly $500 million of sales and $400 million of acquisition activity for 2026, though its share repurchases have effectively replaced a portion of those planned acquisitions. 

“We are already marketing additional communities for sale,” O’Shea said. “As those sales are completed, if our stock remains attractively priced, we would consider additional repurchases, and to the extent we did so, we would do that instead of acquiring the remaining $200 million of acquisitions that are in our plan.”

Regional trends

AVB saw its strongest performances in the New York metro area and Northern California, which both produced revenue growth slightly ahead of what the firm expected through Q1, according to Chief Operating Officer Sean Breslin. Within the New York metro area, the strongest markets were New York City and northern New Jersey. 

In Northern California, San Francisco has been the strongest market, followed by San Jose and the East Bay. The entire region has benefited from relatively healthy net job growth in the last few quarters, Breslin said on the call, and “the strengthening we've experienced in San Francisco and San Jose started to spill over into the East Bay this past quarter.”

The mid-Atlantic modestly outperformed during the quarter, with slightly higher occupancy across the region and greater other rental revenue, Breslin said. “I wouldn't say it's turned the corner just yet, but it's definitely more stable than mid to late last year.” 

“With the hangover from job cuts over the past year starting to fade, we believe that meaningful reduction in new supply will help support the stabilization of the mid-Atlantic region sometime this year,” Breslin said. “There's even in certain sub markets, probably more defense sector-oriented, maybe a little bit of optimism.”

Meanwhile, Boston, Los Angeles and Seattle modestly underperformed AVB’s revenue expectations, and Breslin pointed to a lack of job growth in those markets.

Although concessions have been high recently, they also vary greatly by region and subregion, according to Breslin.

“Are our concessions up in Boston and Seattle and LA year over year? Yes. Are they down meaningfully in Northern California, New York metro area? Yes. So it really depends on the market,” Breslin said. “Overall, I would say it really is a function of the various regions in terms of the specific data points that you're looking for.”