By National Multifamily Housing Council
The December 2023 edition of the NMHC Quarterly Survey of Apartment Construction & Development Activity found that construction and rental housing firms continue to face challenges in the creation of new housing. Delays in construction, a lack of financing, and the overall economic infeasibility of projects caused by the interest rate environment continue to confront the market.
Delays are still an expected feature of the current development environment, with 84% of respondents reporting construction delays, although that is slightly improved from the last two quarters. Of those experiencing delays, 81% reported delays in permitting and 92% reported start delays.
Delays in starts were largely attributed to economic uncertainty (83% of respondents, up from 57% last quarter), availability of construction financing (79% of respondents, 78% last quarter) and economic feasibility (71% of respondents, up from 61% last quarter).
“This continues to be a challenging construction market for rental housing providers,” said NMHC President Sharon Wilson Géno. “High interest rates, rapidly increasing insurance costs, skyrocketing state and local taxes are all coming together to make it difficult to build new housing despite the clear need for more housing of all types in communities throughout the country. Because of these tough market conditions lawmakers should act on policy options they can pursue to expand housing supply and lower costs, including expansion and reform of affordable housing programs, relief on insurance cost and other initiatives that will improve capital market conditions.”
Two positive notes were that staffing shortages held at 4% as a cited cause of delayed starts, a sign that the labor market may be normalizing, and reported lumber prices declined for a seventh straight quarter, dropping an average of 3% over the last three months. (Source)