Multifamily development and construction firms continue to navigate headwinds—the rising cost of capital, a slowing economy, and a softening apartment market.
While material shortages have started to ease, delays remain part of the current development landscape. According to the National Multifamily Housing Council (NMHC) Construction Survey in June, 90% of survey respondents reported delays, which is up from 79% of respondents reporting delays in the March survey. Of those who reported delays, 70% cited delays in permitting and 78% noted start delays.
Conducted between June 7 and 23, the NMHC quarterly survey found that of those experiencing delayed starts, the two primary causes cited were project infeasibility and access to construction financing, followed by permitting, entitlement, and professional services and economic uncertainty.
“Rental housing firms continue to face a challenging market caused by lingering aftereffects of the pandemic; rising interest rates; increased costs of development, such as construction costs and insurance; and a lack of certainty about broader economic conditions over the coming months,” said NMHC president Sharon Wilson Géno.
For the fifth straight quarter, respondents reported a drop in lumber prices, down 4% over the previous three months. Insulation prices increased on average by 3%, the same rate as in March. For other products, respondents reported price increases but at a slower rate. Prices for appliances increased 2%, down from 7% the previous quarter; electrical components increased 7%, down from 9%; and exterior finishings and roofing increased 3%, down from 4%.
Respondents during this quarter’s survey were mixed on the construction labor market. The majority, 66%, reported no change in labor availability. However; 17% reported construction labor to be less available, up from 10% in March, while only 10% reported construction labor to be more available.
Nearly a third of respondents, 32%, noted labor costs had increased as expected over the three-month period, while a quarter of respondents said they didn’t see increases.
Wilson Géno called for policymakers to work with housing providers to enact solutions that lower the cost of housing and help renters have more affordable options.
“In this environment, we need to expand the supply of housing by creating more incentives and removing the roadblocks to new multifamily housing development,” she said.
