The bids got more competitive. The prices didn’t come down. Four construction leaders at apartment developers told Multifamily Dive this week that cheaper materials and hungrier contractors have not reopened the markets that stopped working two years ago, and the reason is that contractors are converting price volatility into contingency rather than into sharper numbers.
Stabilized is not the same as cheaper
Patrick Kassin, senior vice president and regional development partner at Woodfield Development, put it directly: costs haven’t come down enough to suddenly make a lot of markets work that didn’t work six or 12 months ago. Materials pricing is more predictable than it was a few years ago, he said, but it stabilized at a much higher level after the early-2020s run-up.
Tommy Gallagher, head of construction at Middleburg Communities, described costs as relatively flat through 2026 with modest local declines. More competitive bidding is being offset by higher materials and commodity costs. He flags permitting timelines and utility coordination as schedule and margin drags, while maintaining that interest rates, capital markets, land basis and achievable rents are still what decide feasibility.
Rebar and drywall are where the contingency goes
Matt Ritsko, president of construction at Nashville-based Southern Land Co., named the two commodities generating the most confusion: rebar and drywall, where fluctuating timelines, demand and prices have pushed contractors to build more contingency into their pricing.
That’s the mechanic worth understanding. When a sub can’t forecast what a material costs at the time of purchase, the rational response isn’t to sharpen the bid, it’s to widen the buffer. So an owner sees more bidders, reads that as a soft market, and then can’t work out why the guaranteed maximum price didn’t move. Both parties are behaving sensibly and the number stays where it is.
Tariff uncertainty makes it worse in a specific way. Kassin points at the difficulty of underwriting a project that may not break ground for 12 to 18 months. The problem isn’t the tariff rate, it’s that you have to name a number today for material you’ll buy in a year and a half under a policy that may not exist by then.
Volume outlook is flat, not falling
Middleburg expects more groundbreakings in 2026 than 2025. Alliance Residential, under chairman and CEO Jay Hiemenz, expects about the same. Woodfield is being selective, with Kassin saying the firm won’t start a project just to maintain a certain level of volume.
Discount this appropriately. It’s four named executives, not a survey. There’s no sample, no weighting, and no figures attached to any of the cost claims. Every source is a developer with a reason to signal discipline to capital partners, and “we’re being selective” is also what you say when deals won’t finance. The rebar and drywall detail is anecdote until you match it to producer price data.
The counterweight is that large privately funded residential keeps moving anyway. Chicago’s 1901 Project broke ground in June with a first phase weighted toward hospitality and entertainment, deferring 9,500 planned apartments until the early revenue shows up.