NAHB analysis of the 2017 Census Bureau Survey of Construction (SOC) data shows that, nationwide, the share of non-conventional financing in 2017 accounted for less than a third of the market, at 30.8%. The reliance on non-conventional forms of financing varied across the United States, with its share at 35.4% in the South Atlantic and West South Central divisions but accounting for only 15.5% of new single-family home starts in the East North Central division. This share is roughly half of the US average, making it the lowest share of non-conventional financing in the nation.
Non-conventional forms of financing, as opposed to conventional mortgage loans, include loans insured by the Federal Housing Administration (FHA), VA-backed loans, cash purchases and other types of financing such as the Rural Housing Service, Habitat for Humanity, loans from individuals, state or local government mortgage-backed bonds.
Nationwide, FHA-backed loans remained the most dominant form of non-conventional financing of new home purchases, accounting for 12.2% of market share. FHA-backed loans accounted for the majority of all non-conventional financing in the South Atlantic, West South Central, and Pacific divisions. FHA loans are 19.6% of the market share in South Atlantic, which is the highest FHA-loans share in the country and 13.6% in West South Central division, and 12.8% in Pacific division. New England division reported the lowest FHA-backed loans at 0.6%.
The share of cash purchases, the second most prevalent form of non-conventional financing, was at 9.6% nationwide in 2017. Cash financing dominated non-conventional forms of financing in New England, where more than a quarter of all homes started were purchased with cash (27.3%). Cash purchases led non-conventional financing in Middle Atlantic (15.0%), East North Central (10.9%), West North Central (10.7%), and East South Central (7.9%). The lowest market share was reported in South Atlantic division where 5.7% of single-family starts were financed with cash.
VA-backed loans was most used in the Mountain division, which accounted for 13.0% of non-conventional forms of financing. This is over thrice as high as the national average of 4.0%. In East North Central division, VA-backed loans were only 1.0% of market share.
Other Financing as the Rural Housing Service, Habitat for Humanity, loans from individuals, state or local government mortgage-backed bonds was highest in West South Central where it was 4.1%, exceeding the national average of 2.3% while New England division reported the lowest share at 1.0%.