Market conditions for apartments are improving, though costs and delays remain problematic, according to a survey from the National Multifamily Housing Council.
The latest edition of the NMHC Quarterly Survey of Apartment Construction & Development Activity found on the positive side that price increases and construction delays have come down from their post-pandemic peaks, and the labor market has eased up.
Construction delays remain common, with 79% of respondents reporting delays, but that compares with 84% in December 2022, 90 percent in September 2022 and the 97% in June 2022. Respondents cited project infeasibility as the primary cause, followed by economic uncertainty and availability of construction financing.
The labor market, meanwhile, showed positive signs on staffing and costs. Only 7% of respondents cited staffing shortages as a cause of delayed starts, down from 18% in December 2022 and 31% in September 2022. Encouragingly, nearly a quarter of respondents (24%) said labor costs did not increase at all over the past three months.
The survey found that costs of materials are still on the rise, with the exception of lumber. Prices for exterior finishes and roofing are up by 4%, electrical components by 9%, appliances by 7% and insulation by 3%, while lumber prices declined 5%.
Despite their improvements from recent quarters, delays and costs remain challenges that are impeding the building of new housing, especially at the low and middle-income price points, NMHC cautioned.
“Supply chain constraints, still high labor and material costs, and complex and expensive regulatory barriers continue to restrict the development of badly needed housing,” said NMHC president Sharon Wilson Géno. “With policymakers of both parties and all levels of government increasingly understanding the need for more housing, now is the time to enact policies that will increase supply, including improvements to the Low-Income Housing Tax Credit (LIHTC), Middle-Income Housing Tax Credit, improving and expanding the Section 8 Housing Choice Voucher program and passing zoning reforms.”