Developers Face Construction Delays, Materials Scarcity: NMHC

The latest survey reports a continued shortage of key products alongside price increases.
Photo by Dylan Mullins on Unsplash

More than a year into the COVID-19 pandemic, a majority of multifamily developers are still experiencing construction delays as well as increases in construction material pricing, according to the National Multifamily Housing Council’s latest survey.

The organization released its sixth installment of its COVID-19 Construction Survey, which showed that 75 percent of respondents are facing construction delays in the markets they operate in. The report showed that 77 percent of those who experienced delays said the cause was permitting, while 75 percent reported a delay with starting construction.

The survey was conducted from Feb. 10 to March 5 of this year and garnered 76 responses from leading multifamily construction firms. This sixth edition of the report shared similar statistics regarding construction delays to the fourth edition released in July 2020 where 83 percent noted permitting delays and 71 percent reported a pause in construction starts.

Multifamily developers also faced a lack of construction materials as well as increases in pricing. The report showed that 83 percent of developers were affected by a lack of materials, the highest share recorded since NMHC started this survey in late March 2020. According to the respondents, 71 percent said there was a lack of appliances, 53 percent noted lumber scarcity and 29 percent marked down doors and windows.

When it comes to the price of these construction materials, 93 percent of respondents said they experienced price increases. Of those who reported material price increases, 40 percent said the price increases were more than 20 percent. A large majority of developers, or 81 percent, indicated that there was an increase in lumber pricing.

Developers have had to adapt and employ new strategies to deal with the issue of construction materials. According to the report, 68 percent of developers are sourcing materials from alternative locations and 51 percent of them are sourcing alternative building materials.

MOMENTUM AND LABOR BOUNCING BACK

Despite the struggles the multifamily developers are currently facing, many respondents are continuing operations on their projects or had experienced a pause earlier in the pandemic and have since resumed operations. Nearly half of the respondents at 46 percent said they have not paused or cancelled operations at this point with their projects and 24 percent of those surveyed said they had paused earlier in the pandemic but have since resumed work. Another 12 percent said they have paused operations but are definitely planning on resuming work.

A minority of those respondents were facing a different outcome, as 5 percent reported that they have cancelled projects outright and another 12 percent have projects that have been paused indefinitely.

Multifamily developers are also not facing many challenges related to labor. According to the survey, 36 percent of developers reported being affected by the availability of labor. The number is up from the survey’s fifth round that reported 20 percent and was attributed to a variety of reasons including COVID-related absences, delays, furloughs and lack of competition.