WASHINGTON, DC-After a repeated reports of underperforming REITs throughout 2013, January of 2014 was a pleasant surprise for REIT investors: returns rose for the month, significantly outpacing the broader equity market.

On a total return basis, the FTSE NAREIT All REITs Index rose 3.38% in January, the FTSE NAREIT All Equity REITs Index increased by 3.31%, and the FTSE NAREIT Mortgage REITs Index was up 5.96%, according to NAREIT figures. Meanwhile, the S&P 500 was down 3.46%.

Manufactured homes and free-standing retail were the industry’s top-performing sectors for the month, both delivering 8.61% total returns. Other high-performing sectors, according to NAREIT, included health care, which was up 8.06%; the home financing segment of the FTSE NAREIT Mortgage REITs Index, which up 6.52%; and multifamily, up 6.35%.

This is not to say that REITs have shaken off last year’s woes. The timber sector, with a negative return of 4.14%, did not deliver a gain for the month of January. More to the point, for the 12 months ended Jan. 31, none of the REIT indices came close to matching the S&P 500′s gain of 21.52%. Also, a credible argument can be made that the REITs only outperformed the S&P in January because the market was so spooked by the roller coaster the emerging market decided to ride. Without that volatility, it could be surmised, REITs would have underperformed again.

Brad Case, NAREIT’s VP of Research, attributes January’s REIT performance to a more basic premise–the market is always looking for value and by January concluded that it had unfairly penalized REITs. That, coupled with the S&P 500′s rocket ascent last year, caused REITs to be ignored or dumped from portfolios. “I think what happened in January is that investors took a second look and decided that the non-REITs side is overvalued,” Case says.

The bigger story, he says, is that investors are starting to be more reactive to macro economic improvement and not solely on the direction of interest rates as they were last year starting in May.

“It’s not that the market ignores interest rate rises but improvements in the economy are more important. For some reason last summer investors ignored the macro economic improvements and focused only on interest rates.”