Home Builder Credit Conditions Continue to Tighten

Credit conditions continued to tighten for home builders in Q-2 2025, according to the National Association of Home Builders’ Land Acquisition, Development and Construction (AD&C) Survey. In Q-2 2025, the total volume of AD&C loans fell for the sixth consecutive quarter to $469.1 billion, which is down by 5.3% from the previous year. The volume of one-to-four family residential construction and land development loans alone totaled $89.8 billion as of Q-2 2025, down by 0.3% from the previous quarter and by 2% compared with the same period one year ago.

As the volume of outstanding 1-4 family residential construction loans fell, the volume of loans 30+ days past due or nonaccrual status also fell. The total level of past due and nonaccrual loans was $1.1 billion, down from $1.2 billion the quarter prior. As a share of the total 1-4 family residential construction loan volume, this accounts for 1.2%. The level of loans in nonaccrual status was $572.1 million while the level for 30-89 past due was $469.2 million. Loans are classified as nonaccrual when one or more of the following conditions apply: the loan is 90 days or more past due on principal or interest (unless it is well-secured and in the process of collection); the bank no longer expects full repayment of principal and interest; or the borrower’s financial condition has significantly deteriorated, warranting cash-basis accounting.