While the rental housing construction market has seen some recent improvements, challenges remain, according to the National Multifamily Housing Council’s (NMHC’s) quarterly construction survey in March.
The share of survey respondents, 58%, reporting construction delays over the last three months decreased from 78% in December. Of those experiencing delays, 79% cited delays in permitting, down from the record high of 95% three months ago. Reported delays in starts also increased to 93% of respondents. The most frequently cited cause for delays in starts over the past three months was economic feasibility and economic uncertainty, both at 68% of respondents.
Optimism remains for long-term market conditions, with 60% expecting conditions to improve over the next six to 12 months; however, this is down from 73% in December. In addition, 16% of respondents said they expect conditions to decline over the next six to 12 months, up from 8% three months ago.
In the short term, the majority of respondents, 64%, said they expect market conditions to remain the same over the next three months, down from 81% in December. The share of respondents expecting conditions to decline increased to 28%, up from 8% three months ago.
Another notable change from the previous quarterly survey, 40% of respondents reported they are expecting construction costs to increase over the next three months, up from 8% in December and 11% in September. Nearly half of the respondents, 48%, said they think construction costs will remain the same.
Longer term, the share of respondents expecting an increase in construction costs rose, with 43% expecting higher costs over the next three to six months, up from 30% in December, and 51% expecting higher costs over the next six to 12 months, up from 54% three months ago.
“The March findings make it clear that while we are witnessing some market improvements, rental housing providers continue to face real challenges when it comes to the construction of new communities,” said NMHC president Sharon Wilson Géno. “Economic uncertainty, high interest rates, rising insurance costs, and increasing construction costs all continue to make the building of badly needed housing challenging or even impossible. In order to ensure we can build the housing America needs, policymakers should consider the impact any proposed policy changes could have on the housing market.”
