NMHC investigation examines record construction costs and delays
SAN DIEGO — A record 83% of multi-family developers surveyed reported construction delays in the jurisdictions where they operate, according to the National Multi-Family Housing Council’s (NMHC) National Council for Housing COVID-19 Construction Survey Seventh Edition. The NMHC released the survey at its annual conference here in San Diego, where housing stability and rent assistance were also topics of discussion as GlobeSt.com previously reported.
Of that group, 80% said they experienced delays in obtaining permits, up slightly from 77% in round six and comparable to results seen in previous rounds. Survey respondents reporting construction delays also indicated a significant pause in startups, with a similar 80% still reporting startups delayed more than a year after the start of the pandemic.
The top reasons cited for delays in start-ups were licensing, eligibility, and professional services (70%); projects not being economically feasible at present (56%); and economic uncertainty (27%). The percentage of responses attributing delays to projects that were not economically feasible at the present time increased from 30% in the sixth round to 56% in this round.
“These findings highlight the major challenges that manufacturers and developers face as the economy continues to recover from the depths of the pandemic,” said Doug Bibby, president of the NMHC. “While we are encouraged by the overall outlook for the industry, soaring construction costs and a lack of available labor are making the construction of residential homes increasingly difficult and costly. which exacerbates the affordability challenges faced by communities across the country in the long run. “
The NMHC Construction Survey aims to assess the extent of pandemic disturbance on multi-family construction.
Additional results include:
* 86% of respondents said they had been affected by a lack of equipment, the highest share recorded since the start of the survey.
* 100% of respondents reported material price increases, another record for the survey and up from 93% of respondents in the previous cycle. Among respondents who have seen price increases for materials, the average business has seen a 38% price increase in the past 12 months for its most affected materials.
* On average, respondents have experienced a 201% increase in lumber prices over the past year.
Due to the rising costs of lumber, respondents have taken various measures in response, including price revision plans (62%), economic modifications / eliminations of other materials or accessories (49%) and postponing the start of projects (39%).
* 47% of respondents said they were affected by labor constraints, up 11 percentage points from the sixth cycle and 27 percentage points from the fifth cycle.
* 83% of those surveyed indicated that the offers were increased. Specifically, 69% of those surveyed indicated that the offers were marked up by 5% or more, compared with only 14% of those surveyed saying the same in the last round of the survey.
The survey was conducted from May 17 to June 1, 2021 and received 109 responses from leading multi-family construction companies. The results will be compared to each of the previous six surveys, the first of which was conducted from March 27 to April 1, 2020 and the most recent from February 10 to March 5, 2021.
Check back on GlobeSt.com to learn more about the NMHC Annual Meeting.