The credit market has an opinion about ground-up construction, and it isn’t the same opinion it holds about finished buildings.
The Federal Reserve released its July 2026 Senior Loan Officer Opinion Survey on Aug. 3, covering second-quarter lending across 56 domestic banks and 18 U.S. branches and agencies of foreign banks. Banks eased standards on nonfarm nonresidential and multifamily loans. They left construction and land development standards basically unchanged, and CLD was the only commercial real estate category where a moderate net share of banks reported weaker demand.
The split by lender size
Large banks, defined as those with at least $100 billion in domestic assets as of March 31, eased standards on every CRE loan type. Banks below that threshold left multifamily and CLD basically unchanged. Foreign banks went the other way: a moderate net share reported tighter CRE standards.
Demand followed a similar split. Nonfarm nonresidential and multifamily demand was basically unchanged overall, with large banks seeing stronger demand and smaller banks weaker. CLD demand fell, with a moderate net share, meaning 10% to 20%, reporting the decline.
A special question asked banks to place current standards against their range since 2005. A significant net share, above 20% but below 50%, said CLD standards sit at the tighter end. That’s still restrictive, but the share is lower than in the July 2025 survey, which is the one genuinely constructive number in the release.
What it says about 2027 backlog
This is the origination-stage view of what the spending data has been showing after the fact. Money is moving toward stabilized, income-producing assets and away from ground-up work, and developers are asking for less construction debt on top of banks not offering more. Both sides of the CLD market moved the same direction.
For contractors, that thins the private pipeline behind 2027 backlog before it ever reaches Dodge or Census. Our coverage of June construction spending put private nonresidential ex-data-centers down 7.9% year over year. The SLOOS explains where that came from and suggests it isn’t finished. Deals are still closing, but they look like 3200 West Moore Street in Richmond, where the developer went out of its way at the March groundbreaking to note how few comparable starts were getting financed.
Elsewhere in the survey
Commercial and industrial standards were basically unchanged, with a moderate net share reporting stronger C&I demand from large and middle-market firms, defined as annual sales of $50 million or more. Residential mortgage demand weakened across categories, with HELOCs the only exception. The survey was sent June 17 with responses due July 2, and was prepared by Luke Morgan with Adrian Balderamos, Meghan Carpenter, and Andre F. Silva in the Division of Monetary Affairs.