Apartment Construction Projects Stall Amid Coronavirus Outbreak

The coronavirus pandemic appears to be preventing more developers from breaking ground on new apartment construction projects, which signals that COVID-19 is set to worsen the nation’s affordable housing shortage.

The latest round of the National Multifamily Housing Council’s survey of construction firms showed an 11% uptick in the number of apartment developers reporting significant delays in construction starts from late March to mid-April.

NMHC says that the findings in this latest survey “portends potential for the COVID-19 pandemic to further exacerbate the nation’s affordable housing shortage.”

During the first round of the survey, which was carried out from March 27 to April 1 and had 135 responses from large multifamily construction firms, 55% of the participants reported that they were experiencing construction delays. Of those dealing with delays, 59% said they were experiencing delays in starting projects.

The second round of the survey took place from April 9-14 and had 84 responses. A similar number of respondents, 56%, said they were experiencing general delays. But the number of those who said they weren’t getting projects started on time jumped to 70%.

“Given the rapidly evolving nature of the outbreak and its impact on apartment construction, we wouldn’t want to speculate on the drivers behind the growing delays in starts,” Chris Bruen, research director at NMHC, says in prepared remarks.

“While in the long run, such delays could potentially threaten to worsen the very real housing affordability challenges communities across the country were already facing before the pandemic, our more immediate concern focuses on the health, safety and economic security of the industry’s residents, employees, owners and operators,” he added.

NMHC plans to conduct the construction survey on an ongoing basis to gauge the impact of the coronavirus outbreak on multifamily construction.

Other findings from the survey include:

• The number of firms that reported construction delays related to moratoriums dropped from 62% to 40%. But, at the same time, the number of firms reporting that they were dealing with local moratoriums on multifamily projects climbed from 82% to 95%.
• As for supply chain disruptions, 28% of respondents in the second survey said they were having trouble sourcing materials, a 4% increase from the first survey. But only 5% said they were seeing price hikes for materials, which was essentially unchanged from the initial survey.
• 75% of builders in the latest survey (compared with 73% in the first survey) said they’d adopted new strategies to deal with coronavirus-related challenges. Many reported that they were staggering shifts to reduce worker exposure on construction sites; were finding alternative sources for materials; and had turned to technology to avoid in-person meetings for things like inspections and approvals.