Lenders appear to be easing the way
for lending in areas crucial to the home construction industry. The National
Association of Homebuilders said its fourth quarter 2017 survey of builders and
developers showed a net easing in conditions for funding acquisition and development
of construction sites and for construction of single family homes.
The measure of overall AD&C
funding on NAHB’s tightening index was -15.7, compared to -7.3 in the fourth
quarter of 2016 and -7.6 in the third quarter of 2017, indicating that the
easing was accelerating rapidly. Individual readings also indicated that an
acceleration of easing for both development and construction funding, there was
a quarter-over-quarter change of 11 points toward the favorable in development
conditions, while conditions for land acquisition tightened slightly.
The reason for the relatively large
decrease in net tightening over the quarter across land development and
single-family construction loans is because a larger proportion of respondents
indicated that standards had gotten “better”. While there was a large
percentage increase in the share of respondents indicating that land acquisition
loan standards had gotten better over the quarter as well, it was offset by a
large increase in the portion of respondents saying that standards had gotten
The net tightening across all three subcategories represents
the difference between the proportion of respondents saying that conditions got
“worse” and the share answering that conditions were “better”. The Overall
Index reading is the arithmetic mean across the three sub categories.
NAHB’s financing survey had
converged with the results of the Federal Reserve Board’s Senior Loan Officer
Opinion Survey (SLOOS) for the two previous quarters. The most recent SLOOS
however indicated lending conditions were tightening. The pace of easing and
tightening recorded by each survey also accelerated so the two diverged.
The two surveys have different
universes of respondents; NAHB queries consumers while SLOOS is a survey of
lenders. Further, the Fed vehicle includes commercial real estate and other