Cost of labor and materials, and the impact on multifamily
The impact on the supply chain and our labor market has impacted nearly all industries, grocery, computer chips, manufacturing, and housing. 93 percent of multifamily developers are grappling with delays in construction. Delays are attributed to a lack of workforce and rising material costs. The ninth edition of the National Multifamily Housing Council’s (NMHC) Construction Survey has revealed some of these findings.
Among the 93 percent of multifamily developers who claimed delays, 83 percent reported delays in both start and permits, up from 80 percent in the previous study.
One of the aims of the NMHC Development Survey was to determine the extent of COVID-19’s impact on multifamily construction. 98 percent of respondents said they were impacted by material shortages. For the second year in a row, 100 percent of respondents reported increases in material prices, with the average business seeing a 13 percent rise in the last three months.
The exception to the norm of rising material costs was lumber. During the previous three months, respondents reported an average price reduction of 24%. This followed a round of sharp price hikes in the survey’s seventh round.
Approximately 88 percent of those polled said labor shortages are affecting them. This is a 41-point increase from the seventh round and a 52-point increase from the sixth round. In this poll, a question on how construction labor availability compared to pre-pandemic eras was added. Almost a third of respondents indicated labor was less accessible at pre-pandemic salary levels, but that it was roughly the same at higher pay levels. Fifty-four percent indicated that even at higher pay levels, labor remained scarce. The average pay increase reported by respondents who increased compensation to attract or retain personnel was 12 percent.
Source Data: NMHC Construction Survey