During a period of rising builder confidence and expansion of single-family home building lending for construction declined. Continuing a period of weakness that began in Q4 of 2019. The latest FDIC-insured institution data suggests that home builders were deleveraging during the market rebound of the second half of 2020, as the cost of credit for acquisition, development and construction (AD&C) increased. On a year-over-year basis, (Q3 2019 \Q3 2020) the stock of residential construction loans is down -2.4%, enduring a period of loan weakness that began with the housing soft patch of 2018/2019. This marks the first year-over-year decline since 2013. Since the Q1of 2013, the stock of outstanding home building construction loans has grown by 93%, an increase of almost $37.7 billion. Lending remains much reduced from years past. The current amount of existing residential AD&C loans now stands 62% lower than the peak level of residential construction lending of $204 billion reached during Q1 of 2008.
FEA compiles the Wood Markets News from various 3rd party sources to provide readers with the latest news impacting forest product markets. Opinions or views expressed in these articles do not necessarily represent those of FEA.
AD&C Loan Volume Fell Back in Third Quarter