Cost increases have been especially hard on developers who rely on wood frame construction to build low- and mid-rise buildings.

Apartment developers suffer headaches that keep getting worse as they try to guess where construction costs might go in the economic chaos caused by the spread of the coronavirus.

Overall, prices have risen slightly on average for the materials and commodities that developers need to build new apartments. But while the cost of some materials dropped—like diesel fuel and steel mill shapes—the price of vital materials such as lumber has climbed relentlessly.

“The directionality of pricing is going in all directions,” says Paula Cino, vice president of construction, development and land use policy for the National Multifamily Housing Council (NMHC). “There is a general uncertainty—our members report continued volatility.”

Volatile prices shock developers

About a third (32 percent) of contractors say that cost of construction materials has been higher than they expected because the pandemic, according to the 2020 Associated General Contractors of America (AGC)-Autodesk Workforce Survey, released on Sept. 2.

A growing number of multifamily construction companies also reported rising construction costs, according to the latest survey from the National Multifamily Housing Council (NMHC)—on July, 18 percent multifamily construction firms reported price increases for materials, up from just 4 percent in April, according to the 2020 NMHC Construction Survey.