The September 2024 Quarterly Survey of Construction & Development Activity (Construction Quarterly Survey for short) was conducted from September 3 – 17, 2024 and received 29 responses from leading multifamily construction and development firms.
Last quarter, we 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 three quarters, are also available in a downloadable spreadsheet.
Construction Indicators 3Q 2024 (% of Respondents)
Construction
52%
Experienced
Delays
Pricing
86%
Saw Deals
Repriced
Logistics
10%
Reported Labor Less Available
Logistics
28%
Reported Labor More Available
Inputs
21%
Experienced Materials Delays
In the September 2024 Construction Quarterly Survey, 52% of respondents reported experiencing construction delays over the last three months. This marks the fifth consecutive quarter of decline in reported delays (down from 70% in June, 81% in March and 84% in December). Although the majority of respondents still experience delays, this trend suggests improving conditions.
Of those experiencing delays, 29% of respondents reported that the Rockies (e.g., Denver, etc.) and, separately, Texas (e.g., Dallas, Houston, Austin, etc.) were regions where delays were particularly acute, followed by the Southeast (e.g., Atlanta, Charlotte, Orlando, etc.), at 21%.
Eighty-seven percent of those experiencing delays reported delays in permitting, while 80% reported delays in starts.
The most frequently cited cause for delays in starts over the past three months was economic uncertainty, at 92% of respondents (up from 73% last quarter)—the highest value recorded for any option in any quarter for this question since the survey’s inception. A large share of respondents also attributed these delays to economic feasibility (67% of respondents; down from 77% last quarter) and permitting, entitlement and professional services (50% of respondents; up from 46% last quarter). Those attributing delays in starts to the availability of construction financing decreased for the third consecutive quarter to 42% of respondents.
The share of respondents citing staffing shortages as a cause of delayed starts (0%) has remained negligeable for the last four quarters—from 4% in June and 0% in March—while the share attributing delays to materials sourcing and deliveries was again 0%.
Over the past three months, how long, on average, have municipalities reported it would take before you receive building permits?
| September 2024 | June 2024 | March 2024 | |
|---|---|---|---|
| Up to 2 Months | 3% | 7% | 15% |
| 3-4 Months | 17% | 23% | 31% |
| 5-6 Months | 31% | 34% | 21% |
| 7-8 Months | 14% | 11% | 8% |
| 9+ Months | 21% | 18% | 23% |
| N/A | 14% | 7% | 2% |
Fifty-five percent of respondents this quarter reported additional project requirements unrelated to actual construction being imposed in jurisdictions where they operate, down from 70% of respondents last quarter. Those who reported additional project requirements highlighted offsite improvements and additional infrastructure requirements.
Both the share of respondents who reported deals being repriced up (28%) and repriced down (59%) increased from last quarter (from 20% and 50%, respectively). The share who saw no repricing of deals fell for the third consecutive quarter to 7% of respondents.
Those who saw deals repriced, in either direction, reported an average +4% change, up from +2% last quarter.
In addition to questions about the prior three months, we asked respondents a 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 (68% of respondents; down from 80% last quarter), while 18% of respondents reported they expect conditions will improve (i.e., that it will become easier to build). Fourteen percent of respondents (the same as in June) said they expect conditions will decline in the next 3 months.
Even more so than in June, respondents expressed the expectation that overall conditions will improve in the medium to long term—39% of respondents said they expect overall multifamily construction conditions will improve over the next 3-6 months (28% last quarter), and the overwhelming majority (78% of respondents; up from 72% in June) said they expect conditions will improve over the next 6-12 months.
Regarding multifamily construction costs, most respondents said they expect costs to remain the same over the next 3 months (57%), while 32% of respondents said they expect costs will decrease and 11% expect costs will increase.
Half of respondents said they expect construction costs will decrease over the next 3-6 months (up from 41% last quarter), while a smaller share of respondents (18%; from 20% last quarter) said they expect costs to increase over the next 3-6 months. Over the next 6-12 months, 37% of respondents said they expect costs to decrease, 33% said they expect costs will increase and 26% said they expect conditions will remain the same.
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.e., easier to build) | I expect conditions will decline | I expect conditions will remain the same | Don’t know / N/A | |
|---|---|---|---|---|
| Over the next 3 months | 18% | 14% | 68% | 0% |
| 3-6 months from now | 39% | 11% | 50% | 0% |
| 6-12 months from now | 78% | 11% | 11% | 0% |
While respondents again largely indicated an expectation of unchanged conditions for the availability of debt and equity financing in the near term, they also indicated confidence in a more favorable financing environment in the medium to long term.
A large majority of respondents said they expect both the availability of equity financing (81%; up from 72% in June) and debt financing (82%; up from 75% in June) to remain about the same over the next 3 months.
That said, the share of respondents who said they expect less availability over the next 3 months decreased—from 21% in June to 7% this quarter for equity financing and from 20% to 7% this quarter for debt financing—while the share who expect more availability over the next 3 months for both equity (4%) and debt (7%) ticked up slightly from last quarter.
Similarly to last quarter, respondents seemed confident that both equity and debt financing will become more available in the medium to long term: 36% of respondents said they expect equity to become more available over the next 3-6 months (up from 23% in June), while only 4% expect less available equity financing (down from 20% in June). Similarly for debt, 34% of respondents expect more availability (23% in June) and only 3% expect less availability (14% in June).
The majority of respondents said they expect greater availability of financing over the next 6-12 months—74% regarding equity financing and 67% regarding debt financing—while only 7% expect less availability for both methods of financing, respectively.
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 | 4% | 7% | 81% | 7% |
| 3-6 months from now | 36% | 4% | 54% | 7% |
| 6-12 months from now | 74% | 7% | 7% | 11% |
Much like last quarter, survey results suggest a continued loosening in the construction labor market, albeit with significant variation among respondents.
The share of respondents who reported construction labor to be more available fell to 28% of respondents (from 36% in June and 40% in March) yet remained higher than the share who reported labor to be less available (10%; from 7% in June and 0% in March). The majority of respondents (55%) still thought the availability of labor was roughly the same as last quarter.
Twenty-one percent of respondents reported experiencing delays with specific materials—down from 50% last quarter—while 62% reported experiencing no specific material delays (from 39% last quarter). Of those who reported specific material delays, emphasis was placed on delays related to electrical switchgear.
Lastly, 28% of respondents reported that they had experienced an increase in subcontractor defaults over the past three months (from 20% in June), compared to 55% of respondents who did not (70% in June) and 17% who said the question was not applicable to them.
How does the availability of construction labor compare to three months ago?
| September 2024 | June 2024 | March 2024 | |
|---|---|---|---|
| More available | 28% | 36% | 40% |
| Less available | 10% | 7% | 0% |
| Roughly the same | 55% | 52% | 56% |
| N/A | 7% | 5% | 4% |
