The June 2024 Quarterly Survey of Construction & Development Activity (Construction Quarterly Survey for short) was conducted from June 4 – 18, 2024 and received 44 responses from leading multifamily construction and development firms.
This quarter, we have revised the survey, including the addition of new questions and the removal of some previous ones, to better capture current trends and the most relevant indicators in the multifamily construction market. Historical data from 2022 and 2023 surveys for all questions, as well as from this year’s first quarter, are also available in a downloadable spreadsheet.
Construction Indicators 2Q 2024 (% of Respondents)
Construction
70%
Experienced
Delays
Pricing
70%
Saw Deals
Repriced
Logistics
7%
Reported Labor Less Available
Logistics
36%
Reported Labor More Availabe
Inputs
50%
Experienced Materials Delays
In the June 2024 Construction Quarterly Survey, 70% of respondents reported experiencing construction delays over the last three months. This marks the fourth consecutive quarter of decline in reported delays (down from 81% in March, 84% in December and 88% in September). Although this may suggest an improving environment, construction delays are still highly expected by respondents.
Additionally, 47% of those experiencing delays reported that the Southeast (e.g., Atlanta, Charlotte, Orlando, etc.) was a region where delays were particularly acute, followed by the Rockies (e.g., Denver) at 23%.
Seventy-seven percent of those experiencing delays reported delays in permitting, slightly lower than in March (79%) and December (84%). Reported delays in starts fell for the second consecutive quarter to 84% of respondents, from 87% in March and 92% in December.
As was the case last quarter, the most frequently cited cause for delays in starts over the past three months was economic feasibility (77% of respondents; up from 74% last quarter). A large share of respondents also attributed these delays to economic uncertainty (73% of respondents; up from 62% last quarter), while the shares of respondents who attributed delays to the availability of financing (46%) and to permitting, entitlement, and professional services (46%) was lower than those in March.
The share of respondents citing staffing shortages as a cause of delayed starts (4%) has remained small—from 0% in March and 4% in both December and September—while the share attributing delays to materials sourcing and deliveries fell to 0% from 15% last quarter.
Over the past three months, how long, on average, have municipalities reported it would take before you receive building permits?
| December 2023 | March 2024 | June 2024 | |
|---|---|---|---|
| Up to 2 Months | 10% | 15% | 7% |
| 3-4 Months | 17% | 31% | 23% |
| 5-6 Months | 27% | 21% | 34% |
| 7-8 Months | 20% | 8% | 11% |
| 9+ Months | 20% | 23% | 18% |
| N/A | 7% | 2% | 7% |
Seventy percent of respondents this quarter reported additional project requirements unrelated to actual construction being imposed by their jurisdictions, up from 52% of respondents last quarter. Those who reported additional project requirements highlighted offsite infrastructure work (e.g., work on roads, sidewalks, traffic infrastructure, etc.) as well as additional affordable unit requirements and fees.
The share of respondents who reported deals being repriced up rose to 20% (from 13% in March and 23% in December). While the share of respondents who saw deals repriced down held roughly constant (50% from 52% in March), the share who saw no repricing of deals fell from 27% in March to 18% this quarter.
Those who saw deals repriced, in either direction, reported an average +2% change, up from -1% last quarter.
The June 2024 survey asked respondents an additional set of forward-looking questions around expected market conditions over the next 3 months, 3-6 months and 6-12 months. Over the next 3 months, respondents expressed confidence that overall multifamily construction market conditions will remain the same (80% of respondents), with 14% of respondents expecting conditions will decline and 5% expecting they will improve.
That said, an increasing share of respondents expressed an expectation that overall conditions will improve in the medium and long term—28% of respondents said they expect overall multifamily construction conditions will improve 3-6 months from now and most respondents (72%) said they expect conditions will improve over the next 6-12 months.
Regarding multifamily construction costs, most respondents said they expected costs to remain the same over the next 3 months (61%); however, that share fell to 36% when looking at the next 3-6 months and 34% over the next 6-12 months.
Eleven percent of respondents said they expect construction costs will increase in the next 3 months (20% of respondents over the next 3-6 months and 27% of respondents over the next 6-12 months), while 27% said they expect costs will decrease in the next 3 months. Importantly, while no respondents selected ‘Don’t know / N/A’ when asked about construction costs over the next 3 months, 14% of respondents selected ‘Don’t know / N/A’ when asked about costs over the next 6-12 months.
What are your expectations for the overall multifamily construction market over the next 3 months, 3-6 months, and 6-12 months?
| I expect conditions will improve | I expect conditions will decline | I expect conditions will remain the same | Don’t know / N/A | |
|---|---|---|---|---|
| Over the next 3 months | 5% | 14% | 80% | 2% |
| 3-6 months from now | 28% | 14% | 56% | 2% |
| 6-12 months from now | 72% | 9% | 14% | 5% |
The share of respondents who said they expect equity financing for multifamily construction to become more available over the next 3 months was only 2%, while 21% of respondents said they expect equity financing to become less available over the next 3 months. Almost three-quarters of respondents (72%) expect availability to remain about the same.
Almost identically, only 2% of respondents said they expect debt financing for multifamily construction to become more available in the next 3 months, with 20% of respondents expecting less availability and three-quarters expecting availability to remain about the same.
Respondents seemed confident that equity financing availability would change in the medium to long term: In the next 3-6 months, half of respondents thought equity availability would remain about the same, 23% expect more availability and 20% expect less availability. Considering the next 6-12 months, however, 67% of respondents said they expect equity to become more available, 9% expect less availability and 12% expect relatively unchanged conditions.
A similar story regarding debt financing availability, the share of respondents who expect debt to become more available rises to 23% when considering the next 3-6 months and to 66% when considering the next 6-12 months.
While respondents largely expect unchanged conditions in the short term, most anticipate a more favorable financing environment in the medium to long term.
What are your expectations for the availability of equity financing for multifamily construction over the next 3 months, 3-6 months, and 6-12 months?
| I expect equity to become more available | I expect equity to become less available | I expect availability to remain about the same | Don’t know / N/A | |
|---|---|---|---|---|
| Over the next 3 months | 2% | 21% | 72% | 5% |
| 3-6 months from now | 23% | 20% | 50% | 7% |
| 6-12 months from now | 67% | 9% | 12% | 12% |
Although more mixed than last quarter, survey results indicate that the construction labor market has continued to loosen over the last three months.
The share of respondents who reported construction labor to be more available fell slightly from 40% in March to 36% this quarter, while 52% of respondents (down from 56% last quarter) thought that the availability of construction labor was relatively unchanged from three months ago. Up from no respondents last quarter, 7% of respondents this quarter thought labor was less available.
Half of respondents in this quarter’s survey reported they were currently experiencing delays with specific materials. Of those respondents, heavy emphasis was placed on delays related to electrical components. Lastly, 20% of respondents reported that they had experienced an increase in subcontractor defaults over the past three months, compared to 70% of respondents who did not (9% of respondents said the question was not applicable to them).
How does the availability of construction labor compare to three months ago?
| December 2023 | March 2024 | June 2024 | |
|---|---|---|---|
| More available | 19% | 40% | 36% |
| Less available | 3% | 0% | 7% |
| Roughly the same | 74% | 56% | 52% |
| N/A | 3% | 4% | 5% |
Note: This survey was revised in June 2024.
