NAHB Survey: AD&C Financing Standards Continue to Ease

Builders and developers continue to report easing credit conditions for acquisition, development, and construction (AD&C) loans according to NAHB’s survey on AD&C Financing. However, the pace of easing slowed somewhat in the third quarter of 2016 from the rate in the second quarter.

In the third quarter of 2016, the overall net tightening index based on the AD&C survey was -10.7. The third quarter reading indicates somewhat less easing than in the second quarter of 2016 when the index was -25.0. The index is constructed so that negative numbers indicate easing of credit, the lower the index, the higher the extent of credit easing for AD&C loans.

According to the NAHB survey, easing on net over the third quarter took place on all forms of credit with standards on single-family construction recording the greatest net percentage of easing. A net of 17 percent of respondents reported that standards on loans for single-family construction had eased. Meanwhile, 10 percent of respondents on net said that land development loans had eased and 5 percent of builders on net reported eased credit standards on land acquisition loans.

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