More Builders Banking on Small Banks

Filed in Business Management, Economics, Housing Finance by on April 21, 2017 0 Comments

Small banks are the best bets for builders looking for single-family construction loans. This, according to NAHB economists who recently reported that 64% of residential construction loans in 2016 were made by small and midsize banks (those with less than $10 billion in assets).

NAHB Senior Economist Michael Neal notes that the largest banks have the smallest concentration of residential construction loans, and the small portion of their total assets focused on those loans has remained mostly unchanged for several years.

Meanwhile, the portion of residential construction loans has steadily grown for the smaller banks each year since 2012, especially for those with $100 million to $1 billion of assets.

“It suggests smaller banks are where the relationship banking aspect of home building is taking place,” Neal said in an article by National Mortgage News.

In all, banks held nearly $70 billion in one- to four-family construction loans at the end of 2016 – a big drop from the 2007 total of $202.9 billion, but still a promising sign of recovery when compared to just $42.3 billion in 2012.

For more detailed analysis, read Neal’s article on EyeOnHousing.org.

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