Key facts
- NAHB's net easing index for AD&C loans was -15.3 in the third quarter of 2026, the 19th straight quarter of net tightening.
- The Federal Reserve's net easing index for residential AD&C loans was -15.5 in the third quarter, NAHB reported.
- Average contract rate on land development loans fell to 7.83% from 8.09% between the second and third quarters.
- Average contract rate on speculative single-family construction loans rose to 7.72% from 7.28%.
- Effective borrowing cost on speculative single-family construction was essentially flat at 11.83% versus 11.82%.
- 32% of respondents who built single-family homes financed some production with construction-to-permanent loans, NAHB said.
Credit conditions for residential land acquisition, development and construction loans tightened again in the third quarter of 2026, the 19th consecutive quarter of net tightening, the National Association of Home Builders said in a survey analysis published November 13, 2026.
NAHB's quarterly AD&C Financing survey showed a net easing index of -15.3, meaning more builders and developers reported tighter credit than easier credit. NAHB economist Paul Emrath wrote the analysis. The group said the reading closely tracks the Federal Reserve's October survey of senior loan officers, whose net easing index for residential AD&C loans was -15.5 in the third quarter. Aside from modest lender-reported easing in the second quarter of 2026, both lenders and builders have indicated AD&C credit has been tightening steadily since early 2022, NAHB said.
Financing costs moved in different directions between the second and third quarters. The average contract rate on land development loans fell to 7.83% from 8.09%, while land acquisition loans rose to 8.08% from 7.77%. Speculative single-family construction loans rose to 7.72% from 7.28%, and pre-sold single-family construction loans rose to 7.27% from 7.01%, NAHB reported.
Initial points declined across all four categories, NAHB found: land acquisition to 0.86% from 1.05%, land development to 0.97% from 1.05%, speculative single-family construction to 0.71% from 0.85%, and pre-sold single-family construction to 0.51% from 0.71%. Those offsetting moves left effective borrowing costs, which combine contract rates and points, little changed for most types of AD&C credit. Speculative single-family construction was essentially flat at 11.83% versus 11.82%, land acquisition rose to 10.55% from 10.43%, land development fell to 11.69% from 12.59%, and pre-sold single-family construction fell to 11.47% from 11.67%.