Multifamily Stock Index reaches summer high

“I think the confidence in the market reflects the strong fundamentals for the rental side of the multifamily industry right now,” said Leonard Wood, director of Wood Partners LLC and chairman of NAHB’s Multifamily Leadership Board, in a Sept. 12 news release. “In many markets across the country, the supply of new rental units has not kept up with demand, and that is pushing up occupancy rates, rents and profits.”

The Multifamily Stock Index tracks the total returns (including capital gains and dividends) of 24 publicly traded firms principally involved in the ownership and management of apartments. During the month of August, the MFSI reached 3,328, its highest-ever reading, which was up nearly 30 percent from one year ago.

By comparison, the S&P 500 index with dividends reinvested gained 2.4 percent in August and is about 9 percent higher now than it was a year ago.

The Multifamily Stock Index, created by NAHB in 2002 to track performance of public firms in multifamily housing, continues to dramatically outperform the S&P 500 during even longer time periods. Since December 1998, the index has risen by 232 percent while the S&P 500 with dividends reinvested has gained 19.6 percent.

“Many of these companies were able to take advantage of the condo boom over the last several years, and now that the for-sale market is cooling, they can expect a strong performance from their rental apartment operations,” said Elliot Eisenberg, Ph.D., a housing policy economist at NAHB and creator of the index, in the release. “In addition, the Real Estate Investment Trusts, or REITs, which make up the majority of the companies tracked by the index are well-capitalized and have increasingly strong bottom lines.”