Residential AD&C Loans Increase Slightly to End 2014

Residential acquisition, development, and construction loans are up 2.3 percent as of the end of the final quarter, according to data released by the National Association of Homebuilders on Tuesday.

Data released from the FDIC and NAHB show the stock of 1-4 unit residential loans rose by $1.158 billion during the fourth quarter, an increase of 2.23 percent.

While limited availability for construction loans has been preventing a rebound in home construction, residential loan stock has been rising for the past two years.

On a year-over-year basis, the stock of residential AD&C loans is up 17% from the final quarter of 2013.

The FDIC data only represents at stock of loans however, the consistent growth in AD&C loans is a promising development that could suggest improving lending conditions.

Lending is however, lower than in previous years. The current AD&C loan stock is lower now at $51.2 billion than when it rose to $203.8 billion in 2008.

The newly released FDIC data shows the decline from peak lending for home building AD&C loans continues to nonresidential, land development, and multifamily AD&C loans. This group of AD&C loans has recorded six straight quarters of increase.

Although there is increase in residential AD&C lending, a gap between the demand for home building and available credit still exist. This lending gap is being made up with other sources of capital, including equity, investments from non-FDIC insured institutions and lending from other private sources, which may in some cases offer less favorable terms for home builders than traditional AD&C loans.