Home builders and land developers found credit harder to get again in the third quarter. It was the 19th consecutive quarter of tightening in the National Association of Home Builders’ survey on acquisition, development and construction (AD&C) lending, the short-term loans builders use to buy lots, put in streets and utilities, and put up houses.
NAHB published the results on Nov. 13 in an Eye on Housing post by economist Paul Emrath. The survey’s net easing index came in at -15.3 for the third quarter of 2026. A negative reading means more builders said credit got tighter than said it got easier.
Builder credit tightening matches what banks report
The builder survey and the banks themselves now tell the same story. In the Federal Reserve’s Senior Loan Officer Opinion Survey, NAHB’s equivalent net easing index for the third quarter was -15.5, within a fraction of a point of the builders’ reading.
That was not true three months ago. NAHB notes that lenders reported slight easing in the second quarter of 2026 even as builders reported tightening, a split RealtyWire covered in August. Taken over a longer stretch, NAHB says both groups agree that conditions have tightened since the start of 2022. The Fed survey’s index has been negative in 18 of the past 19 quarters.
The Fed survey also points to weak demand for development money. In a separate Nov. 12 analysis of the survey, NAHB economist Eric Lynch reported that banks tightened standards moderately on construction and development loans and modestly on multifamily loans. Banks also reported significantly weaker demand for both. Construction and development posted a net easing index of -15.5 and multifamily -8.8, the lowest readings for both categories in two years.
Higher contract rates, fewer points
The price of AD&C credit moved in mixed directions, and NAHB said it showed “no clear trend in either direction.”
Average contract interest rates rose on three of the four loan types NAHB tracks between the second and third quarters:
- Land acquisition: 7.77% to 8.08%
- Speculative single-family construction: 7.28% to 7.72%
- Pre-sold single-family construction: 7.01% to 7.27%
- Land development, the exception: 8.09% down to 7.83%
The initial points lenders charge fell in every category. Land acquisition went from 1.05% to 0.86%, land development from 1.05% to 0.97%, speculative construction from 0.85% to 0.71%, and pre-sold construction from 0.71% to 0.51%.
Points matter more on these loans than on a 30-year mortgage because builders usually repay them quickly. NAHB therefore combines contract rate and points into an effective rate. On that basis, speculative single-family construction loans were essentially flat at 11.83%, compared with 11.82% in the second quarter. The effective rate rose on land acquisition loans, from 10.43% to 10.55%, and fell on land development loans, from 12.59% to 11.69%, and pre-sold construction loans, from 11.67% to 11.47%.
Even with those small declines, builders building homes on spec are paying effective rates near 12%. That is well above the 30-year mortgage rate their buyers face, which Freddie Mac put at 7.11% on Nov. 12.
One-time-close loans stay common
The survey also asked about construction-to-permanent loans, which are made to the eventual buyer and convert from a construction loan to a mortgage with a single closing. NAHB found that 32% of builders who built single-family homes in the third quarter financed some of them this way. Among those builders, an average of 58% of their homes were financed with these one-time-close loans.
A rate backdrop that is not helping
NAHB frames the result against wider stress in housing finance. Emrath’s post cites a recent decline in mortgage applications and a rise in delinquencies. He argues that “it is important not to overlook the role access to AD&C credit plays in helping builders and developers expand the supply of affordable housing.”
Policy rates offer little near-term relief. In the Nov. 12 analysis, NAHB noted that the Federal Reserve held the federal funds target at 3.75% to 4.00% in October after a quarter-point hike in September. NAHB said it is forecasting another hike at the December meeting, followed by “a lengthy pause.”
NAHB publishes the full series on its AD&C Financing Survey page. More builder and market coverage is on our Housing Market page.
