
Delays are still prevalent for apartment developers, according to the latest round of the National Multifamily Housing Council (NMHC) Construction Survey.
Conducted between June 6 and June 23, 97% of multifamily developer respondents reported construction delays in the jurisdictions where they operate. Out of this group, 83% said they experienced delays in permitting, and 93% reported delays in starts.
For those reporting delays in starts, the majority of respondents, 85%, cited permitting, entitlement, and professional services as the top issue, while 58% reported material sourcing and delivery. In addition, 38% of respondents cited developments not being economically feasible at the time, an increase of 20 percentage points over the previous quarter.
Developers also continue to navigate rising costs and labor availability. Over half of the survey respondents, 53%, said labor costs have increased over the last three months; an additional 40% said labor costs rose more than they had expected. Half of the respondents reported construction labor availability to be roughly the same compared with three months ago, while 40% said labor was less available; however, 7% reported more availability.
Over three-quarters of respondents, 83%, reported that deals have been repriced over the past three months. For materials, the average respondent reported a 12% increase in the price of electrical components over the past three months, an 11% increase for exterior finishes and roofing, a 10% increase for insulation, and a 5% increase for appliances. However, the average respondent reported a 5% decrease in lumber prices from the previous round of the survey.
“Rising costs, construction delays, and labor shortages—never mind more regulatory barriers and rampant NIMBYism—are making it more and more difficult to build the housing our country so badly needs,” said NMHC president Doug Bibby. “Former President Obama had it right when he recently said that laws and regulations at the local level are inhibiting the creation of affordable housing. Policymakers need to partner with the private sector to bring down costs and find real solutions.”
In June, the NMHC and the National Association of Home Builders released joint research that showed that regulation imposed by all levels of government accounts for an average of 40.6% of multifamily development costs. Changes to building codes in the past 10 years, 11.1%; costs when site work begins, 8.5%; and development requirements, 5.4%, account for the largest share of regulatory costs for multifamily developers, the research finds.