NMHC Survey: Multifamily Construction Slows Significantly Due to Coronavirus Issues

by Kristin Harlow

WASHINGTON, D.C. — As a result of the COVID-19 pandemic, 56 percent of apartment developers reported construction delays, according to a survey by the National Multifamily Housing Council (NMHC). Of those reporting delays, 70 percent said they were experiencing delays in construction starts, an 11 percent increase from a NMHC survey conducted the end of March.

NMHC’s construction survey gauges the magnitude of the disruption caused by the COVID-19 outbreak on multifamily construction. The survey found that 77 percent of respondents are experiencing issues with permitting; 28 percent suffer a lack of materials that is impacting construction operations; and 44 percent indicate that labor restraints related to the virus outbreak are affecting construction operations.

To further illustrate that point, construction starts across all sectors plunged 20 percent by project value year over year in March, according to ConstructConnect, a provider of preconstruction software for general contractors, subcontractors and manufacturers. All types of residential starts were down 9.7 percent.

From February to March of this year, housing construction starts plummeted 22 percent, according to the U.S. Census Bureau. Multifamily starts were down 32 percent.

As more multifamily projects are delayed, there is potential for the COVID-19 pandemic to further exacerbate the nation’s affordable housing shortage, argues NMHC. According to the National Low-Income Housing Coalition, there is a shortage of 7 million rental homes in the U.S. that are deemed affordable and available to extremely low-income renters. The household incomes of these renters are at or below the poverty guideline or 30 percent of their area median income.

As the outbreak continues, construction firms are becoming more adaptive in their strategies, says NMHC. Three-quarters of the respondents indicated that they have implemented new policies to deal with the hurdles forming in the wake of the virus. Some of these new strategies include: sourcing materials from alternative locations; using technology to replace in-person transactions like inspections and approvals; and staggering shifts to reduce on-site exposure.

NMHC intends to conduct its construction survey on an ongoing basis for the foreseeable future in effort to provide a continuing estimation of the impact of COVID-19 on multifamily construction. Full results from the second round of the survey can be found here. Between April 9 and April 14, NMHC collected 84 responses from multifamily construction firms.

Washington, D.C.-based NMHC provides a forum for insight, advocacy and action among apartment owners, managers and developers.

— Kristin Hiller

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