COVID-19 continues to wreak havoc on real estate construction, and it’s getting worse. More than half (57%) of multifamily developer respondents reported construction delays in the jurisdictions where they operate, according to the fifth edition of the National Multifamily Housing Council (NMHC) Construction Survey.
Of this group, 90% reported delays in permitting due to COVID-19, the greatest share to indicate delays since the inception of the survey in late March. In comparison, 83% of respondents reported permitting delays in round four (conducted July 6-15), 85% in round three (conducted May 11-20), 77% in round two (conducted April 9-14) and 76% in the initial survey (conducted March 27-April 1).
Survey respondents reporting construction delays also indicated a significant pause in starts, with 77% reporting delays. The primary reasons cited for delays in starts were permitting, entitlement and professional services (67%); economic uncertainty (58%); and availability of construction financing (46%).
Over three-quarters (80%) of respondents reported being impacted by a lack of materials. This is an increase of 44 percentage points since the last round and by far the highest share recorded since the survey began. Eighty-two percent of respondents reported price increases in materials, a much greater share than in any other round of the survey. In the last round, only 18% of respondents reported price increases. Of those respondents who saw price increases for materials, 38% reported price increases of over 20% for those materials most affected.
The majority of respondents reported pausing at least one construction project since mid-March – 26% reported that they’ve paused projects but will definitely resume, nine percent have paused projects with uncertainty around resuming and an additional 31% paused operations earlier in the pandemic but have since resumed.
Respondents have reported less stress around availability of labor than in previous rounds, with just 20% saying they are impacted by labor constraints, down 19 percentage points from round four.
