Multifamily stock index hits record high in June

The stocks of publicly traded companies whose primary business is multifamily housing outpaced the market as a whole in June, pushing the National Association of Home Builders' Multifamily Stock Index to an all-time high.

"The health of apartment company stocks on Wall Street is another sign of the overall strength of the housing market in this country," said Bobby Rayburn, NAHB president, in a July 29 news release.

"With the echo boom generation now moving into prime renting age and immigration levels expected to remain stable or even increase, the long-term outlook for multifamily housing looks very good indeed."

NAHB's Multifamily Stock Index tracks the total returns (including capital gains and dividends) of 28 publicly traded firms principally involved in the ownership and management of apartments. During the month of June, the Multifamily Stock Index rose by 53 points, or almost 3 percent, to 1,882. With this rise, the index now stands at an all-time high, surpassing the previous mark of 1,843 set back in March. At present, the MFSI is almost 22 percent higher than this time in 2003.

"Apartment stocks remain a darling for investors because they have offered attractive returns compared with other investment opportunities over the past five years," said Elliot Eisenberg, PhD, a housing policy economist at NAHB and creator of the Multifamily Stock Index.

"Despite the consistently strong showing of the S&P 500 over the past year, the (index) has outperformed it," said Eisenberg.

"In fact, since December 1998, the MFSI has risen by 88 percent, while the S&P 500 with dividends reinvested has gained only one-half of 1 percent."

NAHB created the Multifamily Stock Index in 2002 as a way to more easily track the performance of public firms involved in multifamily housing. To allow for historical comparisons to be made between the index and other financial indices, the starting point for tracking performance data for these publicly traded firms was set at Dec. 31, 1998.