The March edition of the NMHC Quarterly Survey of Apartment Construction & Development Activity once again found small improvements in terms of more limited price increases, slightly fewer construction delays and some easing in the labor market. However, while costs and delays may be falling from their post-pandemic peaks, they remain substantial headwinds to the creation of badly needed housing—particularly at low and middle-income price points.
Construction delays remain common, with 79 percent of respondents reporting delays, but that is better than the 84 percent in December, the 90 percent in September and the 97 percent in June 2022.
Notably, respondents experiencing delayed starts were most likely to cite project infeasibility as a cause, followed by economic uncertainty and availability of construction financing.
“As pandemic-caused costs increases begin to alleviate, policymakers and private enterprise must remain focused on one clear goal—enacting policies that support increased housing development,” said NMHC President Sharon Wilson Géno. “Supply chain constraints, still high labor and material costs, and complex and expensive regulatory barriers continue to restrict the development of badly needed housing. With policymakers of both parties and all levels of government increasingly understanding the need for more housing, now is the time to enact policies that will increase supply, including improvements to the Low-Income Housing Tax Credit (LIHTC), Middle-Income Housing Tax Credit, improving and expanding the Section 8 Housing Choice Voucher program and passing zoning reforms.”
Costs mostly on the rise, lumber falls again
- Exterior Finishes & Roofing +4 percent
- Electrical Components +9 percent
- Appliances +7 percent
- Insulation +3 percent
- Lumber -5 percent
The labor market showed positive signs with just 7 percent of respondents cited staffing shortages as a cause of delayed starts, down from 18 percent in December and 31 percent in September. Further, nearly a quarter of respondents (24 percent) reported that labor costs did not increase at all over the past three months.