The majority of builders of single-family homes have pointed to a severe lack of credit as the biggest threat to a potential housing recovery, according to a survey from the National Association of Home Builders (NAHB).
The new builder survey of acquisition, development and construction (AD&C) financing found that 63 percent of respondents felt the availability of credit for single-family construction loans deteriorated in the second quarter.
Four out of five said lenders are lowering the allowable loan-to-value ratios, 76 percent reported that banks are not making new loans, 75 percent said banks are reducing the amount they are willing to lend, and 62 percent said mortgage lenders are requiring personal guarantees or collateral not related to construction projects.
As a result, two-thirds of the respondents reported putting single-family construction projects on hold until the financing picture improved.
“Across the country, home builders and developers are reporting a deterioration in credit availability and intensifying pressure on borrowers with outstanding loans,” said NAHB Chairman Joe Robson, in a release.
“Lenders are cutting off loans for viable new housing projects and producing unnecessary foreclosures and losses on AD&C loans. With the pending expiration of the $8,000 first-time home buyer tax credit, these challenges threaten to halt any positive developments we have seen in the housing market in recent months.”
I’m sure the banks are wise to the fact that homes aren’t selling like they used to, tax credit or not; just as home buyers need more skin in the game nowadays, so do the builders.