The September edition of the NMHC Quarterly Survey of Apartment Construction & Development Activity found that development and rental housing firms continue to face significant challenges. Delays in construction, a lack of financing options, and the overall economic infeasibility of projects caused by rising interest rates make it challenging for housing providers to build badly needed housing.
Delays are still an expected feature of the current development environment with 88% of respondents reporting delays, holding steady with last quarter (90% in June, up from 79% in March and 84% in December). Of those experiencing delays, 79% reported delays in permitting and 79% reported start delays.
Respondents experiencing delayed starts were most likely to cite the availability of financing as a cause (78% of respondents, up from 62%), followed by permitting, entitlement and professional services (74% of respondents) and economic infeasibility (61% of respondents).
“Housing providers continue to navigate economic uncertainty and steep financing challenges caused by high-interest rates, increasing insurance costs, skyrocketing state and local taxes, and a lack of confidence in overall economic conditions,” said NMHC President Sharon Wilson Géno.
“Accordingly, it has never been as important that lawmakers at all levels of government partner with rental housing businesses to enact policies that lower the cost of building rental housing and make it easier to create new communities. Broader housing equity and availability are the only real solutions to the housing crisis the nation faces.”
A bright spot found in the survey was that the share of respondents who cited staffing shortages as the cause of their delayed starts fell from 10% in June to 4% this round. However, other responses regarding the labor market were more mixed. The share of respondents who thought labor costs increased more than expected fell just marginally from 18% to 15%, while the share who thought costs increased less than expected remained constant at 18%.
Average Materials Price Change in 3Q 2023
- +4% Exterior Finishes & Roofing
- +11% Electrical Components
- +7% Appliances
- +4% Insulation
- -3% Lumber
More key findings from the NMHC Construction Survey.
Based in Washington, D.C., the National Multifamily Housing Council (NMHC) is the leadership of the apartment industry. We bring together the prominent owners, managers and developers who help create thriving communities by providing apartment homes for 38.9 million Americans, contributing $3.4 trillion annually to the economy. NMHC provides a forum for insight, advocacy and action that enables both members and the communities they help build to thrive. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC's website at www.nmhc.org.
