FAQs

What is the net easing index and how is it calculated?

The net easing index is a measure of credit tightening or loosening in the market. It is calculated by subtracting the percentage of lenders tightening credit from the percentage of lenders easing credit. A negative number indicates that credit has tightened since the previous quarter.

What were the main ways in which lenders tightened credit in the fourth quarter?

According to the NAHB survey, the most common ways in which lenders tightened credit in the fourth quarter were by lowering the loan-to-value or loan-to-cost ratio and reducing the amount they are willing to lend.

How did the contract interest rates change in the fourth quarter?

For the second consecutive quarter, the contract interest rates declined on all four categories of loans tracked in the NAHB AD&C survey.

Conclusion

The tightening of credit for residential Land Acquisition, Development & Construction (AD&C) continued in the fourth quarter of 2024, according to surveys by NAHB and the Federal Reserve. Despite the modest tightening, this marks the twelfth consecutive quarter of credit tightening in the AD&C market. Lenders primarily tightened credit by lowering loan-to-value ratios and reducing the amount they are willing to lend. However, contract interest rates declined for the second consecutive quarter, impacting the overall cost of credit for AD&C loans. For more information on credit conditions for residential builders and developers, visit NAHB’s AD&C Financing Survey webpage.