Single-family construction lending rose marginally in the first quarter, according to data released by the Federal Deposit Insurance Corporation. The volume of loans outstanding was up 0.8% from the fourth quarter. This increase comes at a time when NAHB’s AD&C Financing Survey indicates a slight tightening in credit conditions in the first quarter. The total volume of outstanding AD&C loans, which includes both nonresidential and residential construction loans, fell for the ninth consecutive quarter.
In the first quarter of 2026, the total level of outstanding AD&C loans fell to $453.3 billion, down 0.6% from the fourth quarter. The quarterly decline was led by a drop in other real estate development loans, which declined 1.8% to $361.5 billion. Meanwhile, the volume of 1-4 family residential construction and land development loans rose to $91.8 billion in the first quarter, up 0.8% from a quarter earlier. The volume of 1-4 family residential was up 1.9% from last year. This marked the third straight quarter showing a year-over-year increase.
It is worth noting that the FDIC data represents only the stock of loans, not changes in the underlying flows, so it is an imperfect data source. Nonetheless, lending remains much reduced compared with years past. The current amount of existing 1-4 family residential AD&C loans now stands 56% lower than the peak level of residential construction lending of $204 billion reached during the first quarter of 2008. Alternative sources of financing, including equity partners, have supplemented this capital market in recent years.
Quality Metrics of Construction Loans
The volume of loans that are 30+ days past due or nonaccrual status rose in the first quarter, to $989.8 million. As a share of the total 1-4 family residential construction loan volume, this accounts for 1.1%.
Breaking this out further, the level of loans 30-89 days past due was $451.3 million, while the volume in nonaccrual status was $495.2 million. The nonaccrual loan volume fell from $522.1 million in the fourth quarter, and the 30-89 past due volume rose from $414.2 million.
Loans are classified as nonaccrual when one or more of the following conditions apply: the loan is 90 days or more past due on principal or interest (unless it is well-secured and in the process of collection); the bank no longer expects full repayment of principal and interest; or the borrower’s financial condition has significantly deteriorated, warranting cash-basis accounting.
