Multifamily development continues to experience longer delays and rising costs, according to the expanded National Multifamily Housing Council (NMHC) Construction Quarterly Survey.
The NMHC started its construction survey toward the beginning of the pandemic to highlight the conditions facing the multifamily industry. With surging demand, it has launched an evolved version to continue to track challenges that have persisted beyond the pandemic. In the latest installment, conducted March 7 to 21, a majority of multifamily developer respondents, 89%, reported construction delays in the jurisdictions where they operate. Out of this group, 85% reported delays in both starts and permitting.
“Our nation is currently facing deep housing affordability challenges that can only be addressed through building new homes. Yet, rising costs, permitting delays, and a lack of labor are making it increasingly difficult to develop housing of all types,” said NMHC president Doug Bibby. “Lawmakers at all levels of government need to acknowledge this crisis and work with industry leaders to curb cost increases, streamline permitting, and resolve supply chain hurdles.”
According to the NMHC, nearly all respondents, 92%, said that deals have been repriced higher over the past three months, with increases of 25% on average. Lumber prices continue to be one of the biggest obstacles for developers, with the average respondent reporting a 45% pricing increase over the past three months. In addition, the average respondent reported a 15% increase in the price of electrical components, a 14% increase in prices for exterior finishes and roofing, a 12% increase in prices for insulation, and a 5% increase in prices for appliances over the past three months.
Labor availability also continues to challenge developers, with more than half of respondents, 55%, saying labor costs have increased more than expected over the past three months. Nearly two-thirds of respondents, 63%, reported construction labor to be less available compared with three months ago, while 34% said it was roughly the same.