Lending for construction projects continued to decline in the latter half of 2024. According to National Association of Home Builders’ Eye On Housing blog, the total volume of acquisition, development, and construction (AD&C) loans issued by FDIC-insured institutions dropped for the third straight quarter, falling to $490.7 billion in Q3 2024 from $495.8 billion in Q2 2024. Loans for one- to four-unit residential construction projects and land development totaled $90.8 billion, an 8.4% decline from the same period last year. This marks the fifth consecutive year-over-year decrease. Other real estate development loans fell to $399.9 billion, a $4.3 billion dip from the previous quarter.
While the volume of 1-4 family residential AD&C loans fell during the third quarter, the volume of past due and nonaccrual residential AD&C loans rose above $1 billion for the first time since 2014. A majority of this outstanding total was made up of loans in nonaccrual status (typically a loan where the lender does not expect to receive payment) which totaled $505.9 million. The outstanding loan balance for those 30-89 days past due was $491.5 million and loans 90 days or more past due totaled $65.4 million. As a share of the total outstanding stock of 1-4 family residential AD&C loans ($90.8 billion), past due and nonaccrual loans ($1.0 billion) made up 1.2% of the outstanding stock of loans. Read more