
The rental housing construction market still faces headwinds; however, developers are optimistic that conditions will improve, according to the National Multifamily Housing Council’s quarterly construction survey in December.
A larger share of survey respondents, 78%, reported construction delays over the last three months, the first quarter of increased reported delays after five consecutive quarters of decreases. This is up from 52% in September and 70% in June. Of those experiencing delays, 95% cited delays in permitting, the highest value recorded since the survey’s inception in March 2022. Reported delays in starts also increased to 90% of respondents.
The most frequently cited cause for delays in starts over the past three months was permitting, entitlement, and professional services at 68% of respondents, up from 50% the prior quarter. Even though economic feasibility and economic uncertainty still were frequently cited causes for delays in starts, the percentages were lower than in the prior quarter. In addition, those attributing delays in starts to the availability of construction financing decreased for the fourth consecutive quarter to 37% of respondents.
While the majority of respondents said they believe conditions will remain the same in the short term and next three to six months, 73% said they expect conditions to improve over the next six to 12 months.
“After the gradual improvement in recent construction surveys, this month’s findings show that rental housing construction and development continue to face challenges at a time when we badly need to expand the supply of housing,” said NMHC president Sharon Wilson Géno. “Still high interest rates, rising insurance costs as well as high state and local taxes all come together to make the building of badly needed housing difficult.”