Strong demand has enabled multifamily REITs to continue besting the broader REIT market, according to an analysis from SNL Financial LC.

SNL analyst Chris Henderson attributed the sector’s outsized returns to potential homeowners holding off on buying, as well as “attractive financing opportunities through Fannie Mae and Freddie Mac.

As of Aug. 10, FTSE NAREIT U.S. Real Estate Index data showed residential REITs up 30 percent in 2010. Equity REITs had total returns of 17.2 percent for the year, according to the Index. Both outpaced the S&P 500, which had gained 1.7 percent since the start of 2010.

Henderson did caution that future developments in the housing market could temper multifamily REITs’ operating fundamentals.

“While multifamily REITs have benefited from an economic environment that has discouraged tenants from moving out, multifamily REITs must also be wary of a decrease in the gap of costs related to renting versus buying,” Henderson said. “With continued decreases in home pricing, many tenants that were previously against taking on the cost of homeownership may be willing to take that plunge going forward. This could have a negative effect on multifamily REITs by either reducing occupancy as tenants acquire homes at discounted pricing or forcing the REITs to reduce rents further to maintain current occupancy levels.”