Multifamily Stocks Continue Rising Trend
During the month of October, the MFSI rose by slightly more than 30 points, the third straight monthly rise for the MFSI, and its best performance in a almost a year. Despite three straight monthly increases, the MFSI has declined in seven of the past 12 months. As a result of this recent rally the MFSI is now down just slightly more than 8% year-to-date. The October jump of a shade less than 1% returns the MFSI to a level it first breached about 14 months ago. 

However, the MFSI remains in negative territory year-over-year for the fourth straight month, this for the first time in more than four years. With this increase, the MFSI finds itself about 16% off its all time high—set just nine months ago—and is more than 11% lower than it was just 12 short months ago. During the past month, the value of the S&P 500 with dividends reinvested rose slightly more than one-and-a-half percent and, as a result, finds itself almost 15% higher than it was one year ago. Because the S&P 500 with dividends increased by about one-half of a percentage point more than the MFSI during the month of October, the performance gap—or percentage difference--between the two indexes decreased from 124% last month to 123% in October—its second lowest reading since May 2005.

For initial article discussing the MFSI in detail see NAHB Multifamily Market Outlook, January 2002. Percent difference is defined as (MFSI minus S&P 500 with dividends)/S&P 500 with dividends.

Despite the very strong 108% rise in the S&P 500 since its recent low set in October 2002, the MFSI has risen 127% during the same 60-month time period. In addition, the MFSI continues to dramatically outperform the S&P 500 over longer time periods including the past five, six and seven years. Since December 1998, the MFSI has risen by a whopping 223% while the S&P 500 with dividends reinvested has gained a much smaller 45%. During the month of October, the price-to-earnings ratio (P/E) of the MFSI strengthened slightly and now stands at 20.30 while the dividend yield, defined as the total cash dividend payments divided by the current stock price, and which moves in the opposite direction, eased to 4.4%. The MFSI is an index of 19 publicly traded US headquartered firms, including 16 REITs, principally involved in multifamily ownership and management. [ return to top ]