Residential Construction Loan Volume Reaches Post-Great Recession High Levels in Q4 2021

According to data provided by the FDIC, with further analysis provided by the National Association of Home Builders (NAHB), residential construction loan volume during Q4 2021 reached a post-Great Recession high, as home building activity posted gains for the entire year.

According to the report, the volume of 1–4-unit residential construction loans made by FDIC-insured institutions increased 1% during Q4 of 2021. The volume of loans increased by $977 million on a quarterly basis. This loan volume expansion placed the total stock of home building construction loans at $87.9 billion, a post-Great Recession high.

Year-over-year, the stock of residential construction loans is up 13.6%. Since Q1 2013, the stock of outstanding home building construction loans has grown by 116%—an increase of almost $47.1 billion.

The NAHB points out that FDIC data is an imperfect source because the data represent only the stock of loans, not changes in the underlying flows. Lending remains much reduced from years past. The current amount of existing residential AD&C loans now stands -57% lower than the peak level of residential construction lending of $204 billion reached during Q1 of 2008. Alternative sources of financing, including equity partners, have supplemented this capital market in recent years.

The FDIC data reveal that the total decline from peak lending for home building construction loans continues to exceed that of other AD&C loans (nonresidential, land development, and multifamily). Such forms of AD&C lending are off a smaller -28% from peak lending. For the fourth quarter, these loans posted a -0.6% decline.