Nearly three in five builders and developers report that loans for land acquisition, land development, and speculative single-family construction have become more difficult to obtain in the aftermath of several bank failures in 2023, according to the NAHB. The surveys indicate that the effect of bank failures has been more pronounced on loans for multifamily development than for pre-sold single-family construction.
When responding to the NAHB survey, 58% of developers were able to report that already it had become more difficult to obtain loans for land development due to the bank failures. One-fourth of them said it had become more difficult to a minor extent. One-third said it had become more difficult to a major extent.
The results for single-family construction (as opposed to development) loans depend on whether the loans are for pre-sold or speculative construction. By one measure, speculative construction loans scored about the same as loans for land development, with 59% builders reporting tighter credit due to the bank failures. However, a relatively small 21% characterized the effect as major, while 38% said it was minor.
NAHB included a similar loan availability question in its first-quarter Multifamily Market Survey (MMS), which also went into the field in April. In the MMS, the effect of bank failures on credit availability is even more evident. A full 77% of multifamily developers reported that it had become more difficult to obtain multifamily development loans due to the stress in financial markets: 42% to a minor extent, 35% to a major extent.
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