A new report from the Federal Reserve Bank of New York finds that home construction loans in the U.S. have dropped in value in the last few years.
That’s partly due to the Federal Housing Administration’s decision to phase out the “comprehensive mortgage origination” program, which is responsible for a significant percentage of home construction originations.
The Federal Housing Finance Agency (FHFA) is now trying to rein in the program, but the new study from the New York Fed’s Research and Statistics Group found that, from 2013 to 2017, home construction in the United States fell by 3.3 percent in value, or $1,542 per square foot.
The study’s authors also note that the decline in home construction value has been driven largely by lower loan payments and the decline of home-equity loans, which were used to finance the construction of more homes.
The Fed researchers found that there are also fewer new construction permits issued during this time period, as fewer builders are able to meet construction requirements.
However, the report notes that there has been a recent uptick in the number of homes being built.
The report also finds that the amount of money that a new home construction borrower is required to pay to secure the loan is much higher than in the past.
Homebuilders can expect to pay between $20,000 and $50,000 for their first home, according to the report, which also found that the average loan balance per borrower has increased over the last decade from $26,000 to $80,000.