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.

Third Quarter 2023 Summary:

According to NAHB’s Survey on Acquisition, Development & Construction Financing, during the third quarter of 2023 the availability of loans for acquisition, development and construction (AD&C) continued to tighten. NAHB's index showed a shift from net easing to net tightening in the beginning of 2022 and now has indicated tightening for seven quarters.

Though interest rates on loans for pre-sold construction and spec construction climbed from the second quarter to the third quarter, interest rates for acquisition and development financing declined. In the third quarter (Q3) of 2023, 125 builders responded to NAHB’s survey and reported the following:

Interest Rates

Results on the cost of credit were mixed. The contract interest rates from Q2 2023 to Q3 2023 were reported as follows:

  • 8.62% to 8.31% on loans for land acquisition
  • 8.70% to 7.78% on loans for land development
  • 8.18% to 8.37% on loans for speculative single-family construction
  • 8.37% to 8.66% on loans for pre-sold single-family construction

Credit Availability

Builders reporting tightening credit from Q2 2023 to Q3 2023 reported the most common ways in which lenders tightened credit were to increase the interest rate on the loans (cited by 80% of the survey respondents who reported tighter credit conditions), reduce the amount they were willing to lend (57%) and lower allowable Loan-to-Value or Loan-to-Cost ratio (52%).

  • 0% reported credit for land acquisition improved in Q3 2023; 59% reported it had tightened. (Up from 48% reporting tightened credit from Q1 2023 to Q2 2023.)
  • 2% reported credit for land development had improved in Q3 2023; 54% reported it had tightened. (Up from 43% reporting tightened credit from the Q1 2023 to Q2 2023.)
  • 0% reported credit for single-family new construction had improved in Q3 2023; 37% reported it had tightened. (Up from 24% reporting tightened credit from Q1 2023 to Q2 2023.)

View the full Q3 survey results here.