Multifamily Developers Vexed By Increasing Material Costs And Construction Delays, NMHC Finds

Fully three-quarters of multifamily developers are experiencing construction delays, according to a new survey by the National Multifamily Housing Council, which collected 76 responses from leading U.S. multifamily specialists from Feb. 10 to March 5.

Among that 75%, a bit more than three-quarters (77%) reported delays in permitting due to the coronavirus, down from 90% in a previous NMHC survey on the same subject from Oct. 6 to Oct. 27 but comparable to surveys early in the pandemic.

Most respondents also reported a significant pause in construction starts, with 75% citing delayed starts one year into the pandemic. The reasons for delays in starts were related to permitting, entitlement or professional services (72%); economic uncertainty (37%); and projects not being economically feasible (30%). 

A vast majority of respondents (83%) reported being impacted by a lack of building materials, the highest share recorded since the NMHC started taking these surveys at the beginning of the pandemic. A record-high 93% of respondents reported price increases in materials, up from 82% in October. 

As soon as the early pandemic restrictions on construction sites started to lift last summer, there was a surge in demand for residential homebuying from people wanting to upgrade their properties or achieve homeownership for the first time, which created an ongoing spike in demand for construction materials and thus higher prices.

The NMHC respondents reported various strategies to deal with material woes, such as sourcing materials from alternate locations (68%) and using alternative building materials (51%). 

Labor is also an issue for multifamily developers, according to the latest NMHC survey. Respondents reported an increase in stress concerning access to labor, with 36% saying they are now impacted by labor constraints, up 16 percentage points from October.