The June edition of the NMHC Quarterly Survey of Apartment Construction & Development Activity found that multifamily development and construction firms continue to face headwinds. The rising cost of capital, coupled with a slowing economy and softening apartment market, continue to inhibit multifamily development, even as materials shortages begin to ease.
Delays are still an expected feature of the current development environment with 90 percent of respondents reporting delays despite the preceding quarters’ downward trend (79 percent in March, down from 84 percent in December and 90 percent in September). Of those experiencing delays, 70 percent reported delays in permitting and 78 percent reported start delays.
“Rental housing firms continue to face a challenging market caused by lingering after effects 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. “That is why it has never been more crucial that policymakers work with housing providers to enact policy solutions that lower the cost of housing and help support our residents who call an apartment home 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.”
Respondents experiencing delayed starts were again most likely to cite project infeasibility (62 percent of respondents, up from 49 percent last quarter), along with access to construction financing (62 percent of respondents, up from 40 percent last quarter), followed by permitting, entitlement, and professional services (57 percent) and economic uncertainty (52 percent).
Prices continue to climb, but not as steeply
- +3 percent Exterior Finishes & Roofing
- +7 percent Electrical Components
- +2 percent Appliances
- +3 percent Insulation
- -4 percent Lumber
Opinions were mixed on the state of the construction labor market, but the majority (66 percent) reported no change in labor availability. A quarter of respondents reported that labor costs did not increase over the last three months, while nearly a third (32 percent) thought that labor costs had increased as expected over the three-month period.
More key findings from the NMHC Construction Survey.
