Single-family construction lending fell slightly in the second quarter, according to data released by the Federal Deposit Insurance Corporation. The volume of 1-4 family residential construction and land development loans outstanding was down 0.4% from the first quarter. The total volume of outstanding AD&C loans, which includes both nonresidential and residential construction loans, rose for the first time in nine quarters.
In the second quarter of 2026, the total level of outstanding AD&C loans rose to $453.5 billion, up from $453.3 billion in the previous quarter. The volume of 1-4 family residential construction and land development loans fell to $91.3 billion in the second quarter, down 0.4% from a quarter earlier. Despite the quarterly decline, the volume of 1-4 family residential was up 1.7% from last year. This marked the fourth straight quarter showing a year-over-year increase. The volume of all other real estate development loans rose to $362.1 billion, up 0.1% from the first quarter but down 4.6% from a year ago.
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 at $204 billion during the first quarter of 2008. Alternative sources of financing, including equity partners, have supplemented this capital market in recent years.
Quality Metric of Construction Loans
The volume of loans that were 30+ days past due or in nonaccrual status fell in the second quarter, to $967.8 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 $425.9 million, while the volume in nonaccrual status was $492.2 million. The nonaccrual loan volume fell from $493.7 million in the first quarter, and the 30-89 past due volume fell from $451.5 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.
