Dive Brief:
- Banks may be finally starting to ease up on the tight availability of residential acquisition, development and construction loans, a National Association of Home Builders analysis reported Tuesday.
- Outstanding balances on loans for 1-4 unit residential construction projects made by FDIC-insured institutions increased 4.7% between the first and second quarter of this year, reaching $56.1 billion in total stock.
- The quarterly bump represents the ninth consecutive quarter of growth in AD&C loans, according to the NAHB.
Dive Insight:
Builders have consistently complained of a dearth of available AD&C loans in recent years, which they say is hindering stronger construction industry growth. The steady increase in loans reflects banks' improving confidence in the industry, and could mean good news for builders frustrated by the restrictions.
Still, residential AD&C lending is significantly lower than before the housing bubble's peak. During the first quarter of 2008, homebuilding loans totaled $203.8 billion — 72.5% higher than in the second quarter of 2015.
Recent surveys from the NAHB found similar results, as builders reported a bump in available loans. A Fed survey, however, put a slight damper on that positive news, as it found some commercial real estate lending is actually tightening, according to the NAHB.
"Despite the steady increases in residential AD&C lending, there exists a lending gap between home building demand and available credit," NAHB economist Robert Dietz wrote.
