Acquisition, Development, and Construction Loan Balances Increased Again in 2022Q4

Analysis provided by the National Association of Home Builders (NAHB) shows that during 2022Q4, residential construction loan volume reached a post-Great Recession high, as home building activity and new home sales remained below trend. Outstanding builder loan balances are on the rise as development debt is being held longer as new homes linger in inventory longer. The NAHB believes that loan balances will decline in the coming quarters as the development loan market becomes more costly and tight due to higher interest rates. This is a reminder, the NAHB says, that tighter monetary policy affects not only housing demand but housing supply as well.

Construction loans made by FDIC-insured institutions for 1–4 residential units increased more than 4% in Q4. The volume of loans increased by $2.2 billion on a quarterly basis. This loan volume expansion places the total stock of home building construction loans at $104.8 billion, a post-Great Recession high.

On a year-over-year basis, the stock of residential construction loans is up 19%. Since 2013Q1, the stock of outstanding home building construction loads has increased by 157%—an increase of more than $64 billion.