WASHINGTON — Homebuilders looking for single-family construction loans may have better luck with small and midsize banks than larger ones, according to a recent report by the National Association of Home Builders.

The report found that 64% of residential construction loans were made by banks with less than $10 billion of assets. Banks with assets of $100 million to $1 billion generally focus more on making one- to four-family construction loans than commercial loans, the report said.

"It suggests smaller banks are where the relationship banking aspect of homebuilding is taking place," said Michael Neal, the senior economist for the homebuilders group.


Banks held nearly $70 billion in one- to four-family construction loans at the end of 2016, up from $42.3 billion in 2012. But it has been a slow recovery since the housing boom. In 2007 when the Federal Deposit Insurance Corp. first started to collect data on one- to four-family residential construction loans, banks held $202.9 billion of single-family construction loans in portfolio.

Currently, the majority of residential construction loans are held by the largest 114 banks, which originate 36% of all residential acquisition, development and construction loans. But those single-family construction loans make up just 0.2% of their total assets.

A third of the 1,204 banks with $100 million to $1 billion of assets have a residential construction focus, and that "percentage has been growing," Neal said.

Only 11% of the 621 midsize banks (with assets of $1 billion to $10 billion) have a real interest in single-family construction lending.

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