Multifamily developers report ongoing delays in permitting and starts due to COVID-19

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More than half (57 percent) of multifamily developer respondents reported construction delays in the jurisdictions where they operate, according to the fourth edition of the National Multifamily Housing Council (NMHC) COVID-19 Construction Survey.

Of those reporting delays, 83 percent highlighted permitting due to COVID-19, which was virtually unchanged from 85 percent in round three (conducted May 11-20), and up from both 77 percent in round two (conducted April 9-14) and 76 percent in the initial survey (conducted March 27-April 1). This round of the survey also featured more detailed questions specific to pricing and financing, and expanded questions on reasons for and timelines of delays.

Survey respondents reporting construction delays also indicated a significant pause in starts, with 71 percent reporting delays. The main reasons cited for delays in starts were permitting, entitlement, and professional services (56 percent); economic uncertainty (52 percent); and availability of construction financing (48 percent).

The NMHC Construction Survey is intended to gauge the magnitude of the disruption caused by the COVID-19 outbreak on multifamily construction. Additional findings include:

  • The majority of respondents reported pausing at least one construction project since mid-March; 23 percent reported that they’ve paused projects but will definitely resume, 18 percent have paused projects with uncertainty around resuming, and an additional 18 percent paused operations earlier in the pandemic but have since resumed.
  • Over a third (36 percent) of respondents reported being impacted by a lack of materials, the highest share recorded since we began conducting the survey in late March. The share of respondents experiencing price increases in materials (18 percent) was effectively unchanged from last round (17 percent), up from 5 percent and 4 percent of respondents in the first two rounds, respectively.
  • Even though the majority of respondents have not been impacted by availability of labor, the share of respondents that indicated they are facing labor constraints increased 14 percentage points during this round of the survey, from 25 percent to 39 percent. This is on par with the labor constraints seen in the first two rounds (44 percent and 41 percent, respectively).

Firms continue to innovate in the face of challenges posed by the outbreak, with 52 percent of respondents indicating they have implemented new strategies to deal with the hurdles formed by the virus’s continued presence. Still, this is down from 59 percent of respondents last round, 75 percent in the second round and 73 percent in the first round who reported implementing new strategies.

NMHC will conduct this Survey on an ongoing basis for the foreseeable future to continue to provide an estimation of the impact of COVID-19 on multifamily construction.

View the full survey results here and a comprehensive overview of the results here.

This Survey is one of a number of NMHC-produced resources focused on the COVID-19 outbreak. Additional resources, data and materials can be found here.