The multifamily construction market is showing signs of moderate improvement, according to the National Multifamily Housing Council’s (NMHC’s) quarterly survey of leading construction and development firms conducted in early March.
Nearly a third of respondents, 31%, reported they are starting more projects than they did the prior quarter. Almost half, 48%, reported unchanged starts, while 12% said they are starting fewer projects.
Another positive is that 31% of respondents cited fewer construction delays, while 60% said delays have been relatively unchanged. Only 2% reported more delays.
The survey respondents also noted easing labor and construction material costs. While the majority cited costs relatively unchanged or increasing about the same rate as inflation—62% for material costs and 69% for labor—24% reported costs decreasing or increasing at a slower rate than inflation for material costs and 21% for labor. Only 5% said the cost of construction labor is increasing faster than the rate of inflation, while 10% said the same for material costs.
“This month’s survey results suggest that we may finally be seeing multifamily construction activity stabilize or even pick up modestly after three years of decreasing starts,” said Chris Bruen, chief economist and senior director of research at the NMHC. “However, the lower costs for labor and materials being reported are likely a result of construction activity being so depressed; a more substantial increase in multifamily development could start to put pressure on supply chains and a labor market diminished from lower immigration.”
Optimism is growing for the long term. The majority of respondents, 68%, said they expect multifamily construction conditions to improve. That percentage falls to 14% of respondents for the next three months and 24% for the next three to six months. While most expect conditions to stay the same, only a small percentage of 5% or less think conditions will decline.