AD&C Financing Survey
NAHB’s quarterly Survey on Acquisition, Development and Construction (AD&C) Financing asks builders and developers about whether the availability of AD&C credit has improved, worsened or stayed the same since the previous quarter. The results are tracked within NAHB’s Net Tightening Index, which is constructed so that positive numbers indicate tightening of credit, with larger numbers indicating more widespread tightening.
Second Quarter 2026 Summary
Credit conditions on loans for residential Land Acquisition, Development & Construction (AD&C) were still tightening in the second quarter of 2026, according to NAHB’s quarterly survey on AD&C Financing. This marks the eighteenth consecutive quarter that residential builders and developers have reported tightening credit conditions.
Among NAHB builders and developers who reported tighter credit conditions in the second quarter:
- More than half (53%) reported that one of the ways lenders tightened was by requiring personal guarantees or collateral not related to the project — putting the entire business, rather than just an individual project, at risk.
- Tied for second place among the most common way lenders were tightening (each reported by 47% of builders and developers) were increasing the interest rate, lowering the loan-to-value or loan-to-cost ratio, and refusing to make relationship loans.
Also in the second quarter, NAHB builders and developers generally reported a rising cost of credit, albeit with a few exceptions. The average contract rate increased on two of the four categories of loans tracked in the AD&C survey:
- from 7.42% to 7.77% on loans for land acquisition; and
- from 7.27% to 8.09% on loans for land development.
Meanwhile, the contract rate actually declined at least slightly on the other two:
- from 7.31% to 7.28% on loans for speculative single-family construction; and
- from 7.19% to 7.01%, on loans for pre-sold single-family construction.
On loans paid off as quickly as is typical in single-family construction, however, the initial points charged on the loans can be a particularly strong driver of overall credit cost. In the second quarter of 2026, average initial points increased on all four categories of AD&C loans. Those changes left the average effective interest rate (taking both contract rate and initial points into account) essentially unchanged at 11.67% (compared 11.68% in the first quarter) on loans for pre-sold single-family construction.
On the other three types of AD&C loans, the average effective rate increased:
- from 9.36% to 10.43% on loans for land acquisition;
- from 10.15% to 12.59% on loans for land development; and
- from 11.22% to 11.82% on loans for speculative single-family construction.
On all four categories of AD&C loans, the average effective rate in the second quarter of 2026 was over 0.6 percentage points higher than it had been at the end of 2025.
