Respondents reported that they expect both debt and equity financing conditions to improve over the next year
Results for this quarter's NMHC Quarterly Survey Of Apartment Construction & Development Activity point to a challenging development environment characterized by increasing construction costs, economic uncertainty, and low rent growth. Yet, while fewer projects are breaking ground, builders and developers remain optimistic in their 6-12-month outlook on overall construction conditions.
Twenty-nine percent of respondents reported starting fewer projects compared to three months ago (an increase from 20% in June), while, notably, 24% said their firm started more projects. Of those respondents reporting fewer projects started, 65% attributed this pullback to either economic uncertainty or projects not being financially feasible. Fifty-nine percent of this group said that low rent growth contributed to them starting fewer projects.
A third (33%) of survey respondents reported that the cost of construction materials increased faster than the rate of the inflation over the past three months, 50% thought the cost of materials tracked inflation, while just 12% of respondents reported a real decrease in material costs.
Twenty-two percent of builders and developers surveyed thought the cost of construction labor increased faster than inflation over the past three months compared to 19% who believe labor costs decreased in real terms (53% reported that labor costs tracked inflation).
"Low rent growth combined with an uptick in interest rates and rising costs for labor and materials is making multifamily development more difficult to pencil," noted NMHC Senior Director of Research and Chief Economist, Chris Bruen. “Yet, despite these challenges, survey respondents remain largely optimistic in their outlook about construction conditions over the next 6-12 months, and nearly a quarter reported actually starting more projects compared to three months ago.”
Encouragingly, half of the respondents (50%) expect overall construction conditions to improve over the next 6–12 months (up from 46% in June) compared to 12% who expect conditions to decline (down from 14% in June).
Aside from the expectation that equity financing will pull back in the very short term (the next three months), respondents believe that both debt and equity financing conditions will improve over the next year.
Construction Indicators 3Q 2026 (% of Respondents)
- 29% reported fewer starts
- 61% reported delays to be unchanged
- 51% saw deals repriced
- 22% reported an increase in labor costs
- 33% reported an increase in material costs
Based in Washington, D.C., the National Multifamily Housing Council (NMHC) is where rental housers and suppliers come together to help meet America’s housing needs by creating inclusive and resilient communities where people build their lives. We bring together the owners, managers, developers and suppliers who provide rental homes for 40 million Americans from every walk of life—including seniors, teachers, firefighters, healthcare workers, families with children and many others. NMHC provides a forum for leadership and advocacy that promotes thriving rental housing communities for all. For more information, contact NMHC at (202) 974-2300, email the Council, or visit NMHC's website at nmhc.org.
