Cost of Credit for US Builders and Developers Falls to Lowest Level Since 2022

In 2025Q4, the cost of credit for residential construction and development declined to its lowest level since 2022, according to the National Association of Home Builders (NAHB) quarterly survey on Land Acquisition, Development & Construction (AD&C) Financing.

NAHB reported that average contract rates fell across all four loan categories tracked in the survey.

• Rates on loans for land acquisition declined from 7.95% in Q3 to 7.61% in Q4.
• Rates on loans for land development decreased from 7.68% to 7.44%.
• Loans for speculative single-family construction fell from 7.89% to 7.47%.
• Loans for pre-sold single-family construction posted the largest drop, from 7.90% to 7.16%.

Average initial points paid by builders and developers also declined for three of the four AD&C loan types.

• Points on land development loans fell from 0.83% to 0.44%.
• Speculative single-family construction loans declined from 0.75% to 0.34%.
• For pre-sold single-family construction, points dropped from 0.67% to 0.37%.
• The only increase was for land acquisition loans, where average initial points edged up from 0.66% to 0.70%.

Despite the decline in rates, builders and developers continued to report tightening credit conditions in Q4. The net easing index derived from NAHB’s AD&C survey registered -9.3, indicating that credit tightened compared with the previous quarter. Similarly, the Federal Reserve’s survey of senior loan officers posted a net easing index reading of -1.8 in Q4. Both surveys have now shown tightening credit conditions for 16 consecutive quarters.

In both cases, however, the net easing index in Q4 moved closer to the break-even point of zero—between tightening and easing—than at any time since 2022Q1.