Two surveys asked the same question about construction credit this quarter and got opposite answers. The gap between them is the story, and it has a mechanical explanation the Federal Reserve’s instrument can’t see.
NAHB’s quarterly AD&C Financing Survey for the second quarter produced a net easing index of -12.0, where negative means net tightening. That’s the eighteenth consecutive quarter in which builders and developers reported tighter credit. The Fed’s parallel survey of lenders came in at plus 3.7. NAHB says it’s the first time since it began comparing the two series in 2013 that lenders reported easing while borrowers simultaneously reported tightening.
Lenders eased on rate and tightened on points
Contract rates did fall in places. Spec single-family slipped from 7.31% to 7.28% and pre-sold single-family from 7.19% to 7.01%. Land acquisition rose from 7.42% to 7.77% and land development from 7.27% to 8.09%.
But initial points rose on all four categories. Land acquisition and land development both went from 0.50% to 1.05%. On acquisition, development and construction loans, which get paid off fast, doubling origination points swamps a twenty-basis-point rate cut. Run it through to effective cost and land development financing went from 10.15% to 12.59% in a single quarter while its headline contract rate moved less than a point. Land acquisition went from 9.36% to 10.43%. All four categories now sit more than 0.6 points above where they were at the end of 2025.
Anyone reading the Fed’s senior loan officer survey and concluding construction credit is loosening is reading the wrong instrument. It measures what lenders say about standards, not what borrowers pay all-in.
The 53% number is the one to watch
Among builders reporting tighter conditions, 53% said lenders demanded personal guarantees or collateral unrelated to the project. Tied at 47% each: raising the interest rate, lowering loan-to-value or loan-to-cost, and refusing to make relationship loans.
Personal guarantees and outside collateral mean lenders are no longer underwriting the project. They’re underwriting the builder’s balance sheet. That’s how a single bad subdivision takes down a company that had four good ones, and it’s a structural change in risk allocation that doesn’t show up in any rate table.
What 12.59% money does to 2027 lot supply
A 12.59% effective cost of land development capital is a de facto moratorium on new lot creation. Development deals penciled at 8% do not pencil at 12.5%, and the lots that don’t get developed in 2026 are the houses that don’t get built in 2028.
It also connects directly to the wage data out of the same organization this month, showing residential building wages falling 2.4% in real terms. Builders facing a 12.59% cost of capital have limited room to bid labor against a data center site paying more.
Larger projects with institutional or public capital stacks are insulated from this in a way merchant builders aren’t. The Fairmont New Orleans conversion at 1010 Common closed its gap with federal and state historic tax credit equity from Monarch Private Capital, which is the kind of structure that survives a repricing of bank credit.
One note on adjacency. This is NAHB’s survey of borrowers, released August 13, and it explicitly contrasts itself with the Fed’s lender survey. The contrast is what makes it a story rather than a repeat.
Source: NAHB Eye on Housing, compared against the Federal Reserve Senior Loan Officer Opinion Survey.