This month’s NMHC Construction Survey found that 90 percent of respondents reported construction delays, with 78 percent of this group reporting delays in permitting and 86 percent experiencing start delays. Notably, an increasing share of respondents reported delayed starts due to a lack of availability in construction financing—from 7 percent of respondents in March, to 15 percent in June, to 31 percent in this survey.
With construction delays a constant, costs remain on the rise with 76 percent of respondents experiencing price increases in projects, at an average rate of 9 percent. One bright spot is that lumber prices seem to be decreasing. Lumber prices, on average, declined for a second straight quarter, dropping 2 percent over the last three months.
Labor costs are on the rise as well with 21 percent of respondents indicating that labor costs had increased more than expected over the last 3 months, though encouragingly, that was the lowest percentage in the last three quarters.
Most costs on the rise
- Exterior Finishes & Roofing (+8 percent)
- Electrical Components (+12 percent)
- Appliances (+6 percent)
- Insulation (+6 percent)
- Lumber (-2 percent)
“The nation is facing extraordinary housing affordability challenges in the wake of the pandemic,” said Doug Bibby, NMHC President. “Costs are up across the board and projects are taking longer and longer to complete. Lawmakers at all levels of government should look at every policy option available to them to reform antiquated zoning, streamline the development process and incentivize the building of new housing of all types and at all prices points.”
Prior to the pandemic, NMHC published the NMHC Housing Affordability Toolkit. As communities across the country deal with affordability challenges, the Toolkit includes six common local housing policies and provides recommendations for how localities can tailor them to their unique market conditions.