NMHC: Pandemic Continues to Impact Multifamily Construction

The ongoing COVID-19 pandemic continues to affect multifamily development, according to the latest round of the National Multifamily Housing Council (NMHC) Construction Survey.

Conducted between Oct. 6 and Oct. 27, 57% of multifamily developer respondents reported construction delays in the jurisdictions where they operate. Out of this group, 90% reported delays in permitting, which is the greatest share seen in the five survey installments since the end of March.

In addition, of those reporting construction delays, 77% said they are also experiencing delays in starts. Respondents cited the primary reasons for the delays: waits for permitting, entitlement, and professional services (67%), economic uncertainty (58%), and availability of construction financing (46%).

The majority of the survey respondents reported that they have paused at least one construction project since mid-March, with 26% saying they will definitely resume their paused projects, 9% with uncertainty around resuming, and 31% who have since resumed paused projects earlier in the pandemic.

The availability and price of materials also are having an impact on developers. More than three-quarters, 80%, said they are being affected by a lack of materials, an increase of 44 percentage points since the last survey installment conducted in July. For those affected by a material shortage, 60% cited appliances as the biggest issue compared with 41% in the previous survey. Nearly half of the respondents, 49%, cited issues with lumber during this survey round compared with none in the July round.

According to the NMHC, 82% of respondents reported price increases in materials, a much greater share than the four previous surveys. Of those reporting price increases, 38% said they are seeing increases greater than 20% for materials most impacted. However, 23% said they have only seen prices increase between 0% and 5%. On the specific materials where price increases have occurred, the majority of respondents, 86%, indicated lumber, up from 55% in the previous survey. Smaller shares also reported increases in PVC and other structural materials, such as concrete, steel, and trusses.

On a positive note, respondents cited less stress around the availability of labor than previous surveys. Twenty percent reported having been impacted by labor constraints, down 19 percentage points from the previous survey. This is the smallest share seen over the five survey rounds.

Developer respondents continue to innovate as they navigate the pandemic: 60% said they have implemented new strategies to deal with the hurdles of COVID-19’s continued presence, up from 52% in the previous survey. The most popular strategies include sourcing materials from alternative locations (80%), staggering shifts to reduce on-site exposure (37%), and using technology to replace in-person transactions like inspections and approvals (50%). Other strategies include sourcing alternative building materials and offering workforce incentives or other benefits.

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