Three-Quarters of Multifamily Construction Firms Are Reporting Delays

Nearly 75% of multifamily builders experienced construction delays from February to March, owing mostly to issues with permitting, entitlement, and professional services, according to recent data from the National Multifamily Housing Council. 

Around 77% of construction firms surveyed reported permitting delays during the period, a decrease from 90% in the previous survey, and 75% experienced delays in starts. After permitting entitlement and professional services issues, economic uncertainty accounted for the most frequently-cited cause of delays at 37% (down from 58% in the previous round). Thirty percent of respondents said delays were the result of starts not being economically feasible at this time, and 21% cited availability of construction financing as a primary driver. A mere 14% cited health and safety concerns.

The majority of those surveyed reported delays of a year or less, with 65% indicating less than six months—the highest share since the question was added, according to NMHC. An additional 30% reported delays of between six and 12 months, up from 21% in the survey’s last round of questioning. 

Overall, the vast majority of construction pros surveyed—83%—said they have been impacted by a lack of materials. That’s the highest share recorded since NMHC began conducting the survey. Rounding out the list: appliances (71%), lumber (53%), and doors and windows (29%). And a record 93% of respondents noted price increases in those materials—specifically for lumber—with 40% of respondents reporting price increases of greater than 20%. The price of lumber has shot up dramatically in recent months, with data from the National Association of Home Builders and Random Lengths showing a record high of $1,000 in late February. Prices began increasing again in December, despite initial predictions that construction costs would decrease during the pandemic.

Availability of labor is also a problem for some firms: 36% of those surveyed reported impacts to labor availability for reasons including COVID-related absences, delays and furloughs lengthening projects, and lack of competition. 

To deal with these issues, 68% of respondents say they’re now sourcing materials from alternative locations, while 51% report sourcing alternative building materials.  Forty-one percent are using technology to replace in-person transactions like inspections and approvals.