Though economic uncertainty is less of a factor than in previous surveys
The March 2024 edition of the NMHC Quarterly Survey of Apartment Construction & Development Activity found that most respondents (81% this round) continue to report construction delays. Despite some softening in the construction labor market, a majority of respondents experiencing delayed starts cited economic infeasibility (74%), economic uncertainty (62%), and the availability of construction financing (68%) as reasons for their setbacks.
More positively, the share of respondents reporting construction delays (81%) declined for three consecutive quarters (90% in June, 88% in September and 84% in December). Of those experiencing delays, 79% reported delays in permitting and 87% reported start delays.
Delays in starts were largely attributed to economic infeasibility (74% of respondents, up from 71% last quarter) and the availability of construction financing (68% of respondents, down from 79% last quarter). Economic uncertainty, the most frequently cited factor in December, fell from 83% to 62% this quarter.
Labor availability and costs also improved. The share of respondents who reported construction labor to be more available jumped from 19% in December 2023 to 40% this quarter. Additionally, the share of respondents who thought labor costs increased more than expected fell from 20% to 2% this quarter, while 51% of respondents reported no increase in labor costs.
“It’s clear that housing providers continue to face notable headwinds as they look to create much needed housing,” said NMHC President Sharon Wilson Géno. “High interest rates, increasing insurance costs, regulatory risk, and rising state and local taxes all make the feasibility of new projects challenging. However, there is reason for confidence. There seems to be greater economic stability as it looks like interest rate increases have at least paused for now. Given the market forces facing housing providers, we encourage lawmakers to reject policies that make the creation of new housing even more difficult, such as rent regulation and other related proposals, and instead, act now to remove regulatory barriers to housing development.”
Average Materials Price Change in 1Q 2024
- +1% Exterior Finishes & Roofing
- +4% Electrical Components
- +1% Appliances
- +2% Insulation
- +0% 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 40 million Americans, contributing $3.9 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 nmhc.org.
