Copyright: JARIRIYAWAT
This is NMHC’s eighth installment in a series of surveys aimed to help the industry stay on top of changing construction market conditions during the COVID-19 pandemic. Here are the major takeaways. (Click here to view full survey results. )
Respondents Experiencing Construction Delays Reached Highest Level Yet
During the most recent iteration of the survey, 93 percent of respondents reported experiencing construction delays in jurisdictions where they operate, an increase from the results reported in each of the prior seven rounds. The previous record was set during the last round of the survey – conducted from May 17 to June 1, 2021 – where 83 percent of respondents reported delays.
Of the group that cited overall construction delays, 83 percent reported experiencing delays in permitting, up slightly from the 80 percent in round seven and comparable to the results seen in the earlier rounds. Similarly, 83 percent of those who faced construction delays were experiencing delays in starts. This level was the highest reported over the entire course of the survey, although it has hovered between 70 and 80 percent since the second round. Permitting, entitlement and professional services (91 percent) was the most cited cause of delays in starts, with the highest share of respondents citing this issue since the question was added in round four. Concerns about the economic feasibility of projects (29 percent) followed distantly, as the share of respondents indicating such decreased 27 percentage points from round seven.
Nearly All Respondents Are Affected by a Lack of Materials
Nearly every respondent (98 percent) reported a lack of materials impacting their construction operations, breaking the record high set during the previous round of the survey (compared to 86 percent in round seven, 83 percent in round six, 80 percent in round five, 36 percent in round four, 29 percent in round three, 28 percent in round two and 24 percent in round one).
When those respondents affected by a lack of materials were asked to cite specific areas of issue, the top three responses were appliances (58 percent in this round/53 percent in round seven/71 percent in round six/60 percent in round five), lumber (44 percent in this round/84 percent in round seven/53 percent in round six/49 percent in round five), and siding, particularly cementitious siding, up from 5 percent in round seven to 31 percent in this round. Other specifically cited materials included metal components such as steel or copper (22 percent), drywall (16 percent), windows (16 percent), paint (16 percent), roofing (16 percent), foam/insulation (13 percent) and structural items such as framing materials or trusses (11 percent). Respondents reported a lack of availability for a wide range of materials during this round of the survey and noted that international sourcing and the volume of housing units under construction has added additional strain.
All Respondents Reported Price Increases for Materials, Though Lumber Prices Moderated
Fully 100 percent of respondents indicated seeing price increases in construction materials for the second consecutive round, up from 93 percent in round six and 82 percent in round five. When asked to cite the specific materials where price increases have occurred, the greatest share of respondents (41 percent in this round/ 22 percent in round seven) simply stated they’ve experienced price increases for all materials. The other specific materials cited were metal components such as steel or copper (32 percent), lumber (20 percent), PVC and other plastics (16 percent), drywall (14 percent), and foam/insulation (14 percent).
Of respondents who indicated price increases for materials, the average firm reported a 13 percent price increase over the past three months for its most impacted materials, excluding lumber. Over the same period, the average firm in this group reported a 24 percent decrease in the price of lumber, following dramatic increases reported in round seven.
In this round of the survey, 72 percent of respondents reported deals being priced up 5 percent or more, up slightly from 69 percent in round seven, and much higher than the 14 percent indicating the same in round six.
Respondents Reporting Labor Availability Issues Was Highest Yet
The vast majority (88 percent) of respondents reported impacts to labor availability — an increase of 41 percentage points from the previous round and up from the 36 percent seen in round six. This is the highest share to report labor constraints over the entire course of the survey. When asked to expand upon their issues of labor availability, half (49 percent) reported a general scarcity of laborers. Other obstacles cited include issues with scheduling (14 percent) where the shortage of workers is creating project delays, as well as the cost of labor (8 percent) due to increased competition for available workers.
Due to the growing reports of construction labor shortages, two questions were added to this round of the survey to gather information on how construction labor availability compares to before the pandemic and how much respondents may have raised compensation levels. Nearly one-third (32 percent) of respondents reported labor to be less available at pre-pandemic compensation but about the same with higher compensation levels, while 54 percent reported that labor was less available even with higher compensation levels. Among firms that reported raising compensation in order to attract or retain laborers, the average compensation increase was 12 percent.
Background
This survey was conducted from August 25 to September 17, 2021 and received 46 responses from leading multifamily construction firms. Results will be compared with each of the seven previous surveys, the first of which was conducted March 27-April 1, 2020, and the most recent from May 17 – June 1, 2021.
