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 2023 Summary:

According to NAHB’s Survey on Acquisition, Development & Construction Financing, interest rates on loans for acquisition, development and construction (AD&C) continued to climb in the second quarter of 2023.

In the second quarter (Q2) of 2023, 129 builders responded to NAHB’s survey and reported that AD&C financing was more costly than in the first quarter (Q1) of 2023. Quarter-over quarter, the contract interest rate increased on all four categories of loans tracked in the AD&C survey. In all four categories, the contract interest rate was higher in Q2 2023 that it has been at any time since NAHB began collecting the data in 2018. At the same time, the average initial points charged on the loans actually declined in all four categories.

Interest Rates

The contract interest rate increased from Q1 2023 to Q2 2023 as follows:

  • 8.50% to 8.62% on loans for land acquisition
  • 8.19% to 8.70% on loans for land development
  • 8.10% to 8.37% on loans for speculative single-family construction
  • 7.61% to 8.18% on loans for pre-sold single-family construction

Credit Availability

Builders reporting tightening credit from Q1 2023 to Q2 2023 reported the most common ways in which lenders tightened credit were to increase the interest rate on the loans (cited by 85 percent of the survey respondents who reported tighter credit conditions), reduce the amount they were willing to lend (73 percent) and lower allowable Loan-to-Value or Loan-to-Cost ratio and requiring personal guarantees or collateral not related to the project (63 percent each).

  • 2% reported credit for land acquisition improved in Q2 2023; 48% reported it had tightened. (Up from 43% reporting tightened credit from Q4 2022 to Q1 2023.)
  • 2% reported credit for land development had improved in Q2 2023; 43% reported it had tightened. (Up from 41% reporting tightened credit from the Q4 2022 to Q1 2023.)
  • 5% reported credit for single-family new construction had improved in Q2 2023; 24% reported it had tightened. (Down from 32% reporting tightened credit from Q4 2022 to Q1 2023.)

View the full Q2 survey results here.