Acquisition, development, and construction financing saw an increase in the first quarter of this year, one more sign that the nation’s construction industry continues to move in a decided post-pandemic direction.
But according to a new survey issued by the National Association of Home Builders, the cost of such financing was up over the final quarter of last year, with 43% of the survey’s respondents saying credit for land acquisition had tightened.
Another 41% in a separate question thought that credit for land developed had also tightened, while 32% said credit for single-family construction projects had tightened.
According to the NAHB’s Survey on Acquisition, Development & Construction Financing, loan interest rate increases during the early part of this year could be attributed to several factors: “Increases in the effective rate may be due to either increases in the contract interest rate charged on outstanding balances or to increases in the initial points charged on the loans.”
Noting that the first three months of this year has witnessed some upheaval in both the financial markets and banking industry, the NAHB survey asked respondents if lending had become more difficult due to such factors.
The response? Some 60% said that lending had, in fact, “become more difficult due to recent financial market stress” for acquisition, development and construction loans.
Another 60% said increased difficulty had come with land acquisition lending, followed by 58% who observed the same trend in land development lending. An equally large 59% asserted difficulty in the speculative single-family construction lending area.
Notes the NAHB narrative: “Only 18% reported that pre-sold construction lending had become more difficult” due to the financial markets and banking disruptions.
By Garry Boulard
