Builders Report 19th Straight Quarter of Tighter Credit as Sentiment, Housing Starts and Pending Sales Data Loom

Home builders and land developers reported a 19th consecutive quarter of tighter borrowing conditions in the third quarter of 2026, the National Association of Home Builders said on Nov. 13, setting a cautious backdrop for a week in which the industry's sentiment index, October housing starts and pending home sales are all scheduled for release.

NAHB's quarterly survey on land acquisition, development and construction (AD&C) financing produced a net easing index of -15.3 for the July-September period, according to the group's Eye on Housing blog. A negative reading means more respondents said credit became harder to get than said it became easier.

Lenders tell the same story

The builder survey closely matched the Federal Reserve's survey of senior loan officers, whose comparable net easing index stood at -15.5 in the third quarter, NAHB economist Paul Emrath wrote. Lenders had reported a slight easing in the second quarter of 2026, but the Fed survey's index has been negative in 18 of the past 19 quarters, signaling that banks have generally been tightening terms on these loans since the start of 2022.

The cost of construction credit moved in both directions. The average contract rate on land development loans fell to 7.83% from 8.09% in the second quarter, while rates rose to 8.08% from 7.77% on land acquisition loans, to 7.72% from 7.28% on loans for speculative single-family construction and to 7.27% from 7.01% on loans for pre-sold homes. Up-front points charged by lenders declined in all four categories.

Taking both the contract rate and points into account, the average effective rate on speculative single-family construction loans was essentially unchanged at 11.83%, compared with 11.82% a quarter earlier. The effective rate rose to 10.55% from 10.43% on land acquisition loans and fell to 11.69% from 12.59% on land development loans and to 11.47% from 11.67% on pre-sold construction loans, NAHB said. The survey also found that 32% of respondents who built single-family homes in the quarter financed some of them with construction-to-permanent loans made to the eventual buyer.

Builder sentiment on Tuesday

The next read on builder confidence arrives on Tuesday, Nov. 17, at 10 a.m. ET, when the NAHB/Wells Fargo Housing Market Index for November is released. Economists surveyed by The Wall Street Journal expect the gauge to hold at 29, according to the Dow Jones data calendar. In October the index fell three points to 29, with current sales conditions at 33, sales expectations for the next six months at 32 and buyer traffic at 18, NAHB reported. The same survey showed 43% of builders cut prices in October, the highest share during the 2020-2026 period, and 65% offered sales incentives.

Starts and pending sales on Wednesday

The Census Bureau is scheduled to publish October housing starts and building permits on Wednesday, Nov. 18, at 8:30 a.m. ET. The Journal's survey looks for starts to rise 4.0% to an annual rate of 1.27 million after falling 5.2% to 1.221 million in September, and for permits to slip 1.4% to 1.38 million from 1.40 million. Economists at Wells Fargo also forecast a 4.0% rebound to 1.27 million after three consecutive monthly declines, while noting that starts are highly volatile from month to month and that high mortgage rates continue to weigh on single-family construction.

At 10 a.m. ET the same day, the National Association of Realtors reports its October pending home sales index, which tracks signed contracts. The consensus calls for a 1.4% decline after a 7.3% drop in September. Later that afternoon, at 2 p.m. ET, the Fed releases minutes of its Oct. 27-28 meeting, at which it held its benchmark rate at 3.75% to 4% with two officials dissenting in favor of a quarter-point increase, RealtyWire noted in its week-ahead preview.

Mortgage rates and retailers

Borrowing costs for buyers have eased slightly. The 30-year fixed mortgage rate averaged 7.11% in the week to Nov. 12, down from 7.18% a week earlier and its fourth straight weekly decline, Freddie Mac said, though it remains above the 6.24% average of a year earlier. The 15-year rate averaged 6.45%. Freddie Mac's next weekly survey is due Thursday.

Home improvement retailers also report during the week. Home Depot is scheduled to report third-quarter results on Tuesday and Lowe's on Wednesday, and their comments on large projects and contractor demand offer a view of spending by owners who are staying in their homes rather than moving.