More Easing for AD&C Lending Conditions


Builders and developers continue to report easing credit conditions for acquisition, development, and construction (AD&C) loans according to NAHB’s survey on AD&C financing.

In the first quarter of 2015, the overall net tightening index based on the AD&C survey was -33.7, which represents somewhat less easing than in the fourth quarter of 2014 when the index was -35.7. The index is constructed so negative numbers indicate easing of credit; positive tightening, so a less negative index means less easing.

A similar net tightening index from the Federal Reserve’s survey of senior loan officers showed essentially no change in the credit: moving from -2.8 in the fourth quarter of 2014 to -2.7 in the first quarter of 2015.

Exh 1 Net Bank Tightening

The survey’s finding of continued easing of lending conditions for AD&C loans is consistent with increases in the FDIC-reported stock of residential construction loans for the first quarter of 2015.

According to the survey, at most 10% of respondents reported credit conditions worsening in the first quarter. For example, 10% of NAHB members said availability of credit for land acquisition worsened, compared to 31% who said it had improved. Only 1% reported worsening credit conditions for single-family construction, compared to 46% who reported better conditions. Similarly, only 7% said credit available for land development was worse during the first quarter of 2015, compared to 42% who said it had improved.

In the first quarter of 2015, builders and developers were asked to compare the availability of new loans for single-family speculative vs. pre-sold construction. Thirty-three percent said the availability of spec loans is the same as for pre-sold loans, while 43% indicated availability of spec loans is somewhat worse than for pre-sold loans, and the remaining 25% said availability of spec loans is significantly worse than for pre-sold loans.




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1 reply

  1. Hello, and thank you very much for having shared this information on these builders and contractors. It is good for these builders and contractors to have assistance and to be up to date on different things in the industry. I think it’s good to always be informed on ways a job can be more efficient and have greater quality for different construction sites or projects.

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