Delays, Rising Costs Slow Construction: NMHC

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An expanded and revamped NMHC Construction Quarterly Survey has found developers face ever-growing expenses, shortages of labor and permitting delays.

“Between rising costs, permitting delays, labor shortages and supply chain issues it is, simply put, becoming even more difficult to develop new housing,” Caitlin Walter, NMHC vice president of research, told Multi-Housing News. “Sadly, this comes at a time when communities across the country are in desperate need of more housing of all types.”

Problems persist

A substantial majority (89 percent) of survey respondents reported they experienced construction delays. Among those reporting delays, 85 percent suffered delays in both housing starts and permitting. The survey found problems first appearing during the pandemic still impact the construction industry. Those impacts are felt through supply chain obstacles and delays resulting from staffing, permitting or entitlement issues.

Almost all those responding (92 percent) reported deals have been repriced higher in the past quarter. Reported repricing resulted in increases of 25 percent on average.

Lumber prices stand as one of the most daunting headwinds to apartment construction. Respondents on average reported a 45 percent surge in prices over the past three months. The survey also found labor availability and logistics/transportation obstacles hampering apartment construction. More than half of survey respondents (55 percent) reported facing higher-than-anticipated labor costs over the past three months.

“The findings of the new NMHC Construction Quarterly Survey make one thing clear. Industry leaders and elected officials at all levels of government need to work together with urgency to clear bottlenecks, reduce unnecessary regulations and streamline processes and find ways to spur creation of new housing,” Walter told MHN.