Tightened Credit for Builders in Q2

Financing
Published
Net Easing Indices - Q2 2024

During the second quarter of 2024, credit for residential Land Acquisition, Development & Construction (AD&C) continued to tighten and became even more expensive for most types of loans, according to NAHB’s survey on AD&C Financing. The survey was conducted in July and asked specifically about financing conditions in the second quarter, predating the release of some relatively weak economic data that has raised prospects for monetary policy easing.

The net easing index derived from the survey posted a reading of -33.7 in the second quarter. (The negative number indicates that credit was tighter than in the previous quarter.) The comparable net easing index based on the Federal Reserve’s survey of senior loan officers posted a similar result, with a reading of -23.8 — marking the 10th consecutive quarter of borrowers and lenders both reporting tightening credit conditions.

According to the NAHB survey, the majority (85%) of respondents noted that lenders were tightening in the second quarter by:

  • Reducing the amount they are willing to lend, and
  • Lowering the loan-to-value (or loan-to-cost) ratio.

Half of respondents also reported tightening by increasing documentation, increasing the interest rate, and requiring personal guarantees or other collateral unrelated to the project.

As credit becomes less available, it also tends to become more expensive. In the second quarter, the contract interest rate increased on all four categories of AD&C loans tracked in the NAHB survey:

  • 8.40% in 2024 Q1 to 9.28% on loans for land acquisition,
  • 8.07% to 9.05% on loans for land development,
  • 8.24% to 8.98% on loans for speculative single-family construction, and
  • 8.38% to 8.55% on loans for pre-sold single-family construction.

Paul Emrath, NAHB vice president for survey and housing policy, provides further insights in this Eye on Housing post.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Codes and Standards
Aug 27, 2026
2027 Building Codes Finalized: Big Changes Ahead for Off-Site Construction and Flood Resistance

The International Code Council recently released the final results of the Public Comment Hearings and Online Governmental Consensus Vote. This marks the final stage of the 2024-2026 code development cycle leading to the 2027 International Building Code (IBC), International Residential Code (IRC) and the other 2027 I-Codes.

IBS
Aug 26, 2026
3 Ways to Maximize Your 2027 IBS Registration

Registration for the 2027 International Builders’ Show (IBS), taking place Feb. 2-4 in Las Vegas, opens Sept. 1. Make the most of your IBS experience by adding education courses, special events and more when you register.

View all

Latest Economic News

Economics
Aug 26, 2026
PCE Inflation Remains Sticky

The latest report shows the Federal Reserve’s preferred inflation gauge remains sticky in July, complicating the Fed’s path to its long-term 2% target. Meanwhile, consumer spending remains resilient but is showing signs of slowing, with real consumer spending unchanged in July. Households are pulling back on spending amid persistent inflation.

Economics
Aug 26, 2026
Multifamily Missing Middle Falls Back

Multifamily missing middle construction declined during the second quarter of 2026.

Economics
Aug 25, 2026
Economic Uncertainty, Affordability Challenges Weigh on New Home Sales

Elevated borrowing costs, rising inflation and broad economic uncertainty continue to curb buyer demand and hold back new home sales.