Tight Lending Standards Still Hurting Home Builders

Washington, DC, Oct. 9, 2014 -- Tight mortgage lending standards continue to affect sales for single-family builders, according to a survey released by the National Association of Home Builders.

Well over half of the single-family builders surveyed indicated that lending standards were “tight” or “very tight,” while only 11% indicated that standards were “somewhat easy” and no builders described them as “very easy,” NAHB said.

“While housing has seen some positive growth throughout the year, there is no denying that tight credit conditions are hindering a full, healthy housing recovery,” said NAHB Chief Economist David Crowe.

“These persistently tight mortgage credit standards continue to limit the number of creditworthy borrowers, particularly younger families and first-time home buyers, from entering the housing market.”

Eighty-three% said they had lost sales due to credit conditions, and of these, the average share of sales lost was 9.7%. NAHB estimates that this 9.7% translates to 18,700 new-home sales lost because buyers were unable to qualify for mortgages.

“NAHB advocates for prudent lending standards, but we’ve seen banks and regulators swing the pendulum too far and create an environment where lending standards are too restrictive,” said Kevin Kelly, NAHB chairman.