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Builder credit tightens on virus concerns

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Builder credit tightens on virus concerns
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For the first time since 2012, builders and developers reported overall tighter credit conditions on loans for land acquisition, development and single-family construction (AD&C) in NAHB’s AD&C financing survey for the first quarter of 2020. Most builders reported that lenders are pulling back because of coronavirus concerns, the National Association of Home Builders reports.

The net tightening index derived from the NAHB survey jumped to 22.7, about 40 points higher than the -22.3 reported in the fourth quarter of 2019. The index is constructed so that positive numbers indicate tightening of credit, with larger positive numbers indicating more widespread tightening.

A similar index from the Federal Reserve’s survey of senior loan officers also showed a spike in tightening. The Fed index jumped to 52.4 in the first quarter of 2020, 45 points higher than the 7.4 reported in the fourth quarter of 2019 and the highest it’s been since 2009.

See more at NAHB’s NAHBNow blog.

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