The National Multifamily Housing Council’s (NMHC’s) quarterly construction survey in September continues to show mixed market conditions. While construction delays remain low, economic uncertainty persists.
Similar to June’s findings, less than half of the respondents, 46%, reported delays, over the past three months—this is nearly half the frequency who reported delays from 2022 to 2024. This marks the second time since the survey was launched during the pandemic that less than 50% reported delays.
Economic feasibility and economic uncertainty remained the most frequently cited causes for delays in starts over the past three months. Over three-quarters of respondents pointed to economic feasibility—up from 57% in June and 68% in March. In addition, 62% cited economic uncertainty, and 52% reported permitting, entitlement, and professional services for delays.
Increasing from 34% in June, 41% of survey respondents reported deals repriced down, while 26%, down from 38%, reported deals repriced up.
Despite hurdles, survey respondents remained more optimistic about overall conditions. Over the next three months, slightly more, 18%, said they expect conditions to improve than the 16% who expect a decline. Longer term, 61% of respondents reported they expect conditions to improve compared with 11% who expect conditions to decline.
While survey respondents expect construction costs to increase over the coming year, they have more positive expectations that both debt and equity financing will become more available in the medium and long term.
"The prevalence of construction delays appears to be on the decline, but private data providers are also showing fewer multifamily starts to begin with compared to last year,” noted NMHC chief economist and senior director of research Chris Bruen. “The primary cause of decreasing starts and construction delays is one and the same—the combination of low rent growth, persistently high interest rates, and rising operating costs are making projects increasingly difficult to pencil.”