Banks may be backing away from the multifamily construction pipeline, according to a recent survey.

A report from National Association of Home Builders (NAHB) economist Michael Neal—using a recent Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) from the Federal Reserve Board—says that banks are starting to grow a little more conservative on apartment lending.

Specifically 12 percent of banks reported tighter lending standards on loans secured by multifamily residential properties, while only 10.7 percent reported easing. That means, on net, 1.3 percent of all banks reported tighter lending standards.

Construction firms have yet to notice an impact.

“I’m turning jobs away,” says Marc Padgett, principal at Jacksonville-based Summit Cos. “There is no way banks are tightening up.”

Other contractors agree that the pace of today's business is anything but conservative.

“We haven't seen that at all and are continuing to run on full cylinders,” says Colin Edelstein, director of Atlanta-based NorSouth Constructs.

But on the development side, Craig S. Hughes, principal of Austin-based Oden | Hughes, development, construction and management, is seeing signs of slowing.

“While we have not yet had any difficulty with financing any of our construction loans, I have spoken with one significant lender that expressed their organization has instructed the regional offices to curtail new multifamily loans for the time being,” he says. “They also said they had gone back and participated out, and/or swapped some of their existing loans in order to gain diversity into other product types.”

But, Hughes is still seeing deals get through. “Generally, we are still finding that well-sponsored deals on projects in good locations with adequate equity are financeable,” he says.

Edelstein says he’s been hearing chatter of tightening of sponsor qualification for awhile and wonders if the NAHB findings are a result of overdevelopment fears. For instance, 238,143 new units are expected to open next year, according to Dallas-based Axiometrics. In 2016, two years away, the firm already has 38,443 new units opening.

“Perhaps as institutions get a little more skittish of overdevelopment, they are finally implementing some of those criteria to less established or capitalized sponsors and developers and that is translating into the tighter underwriting in the NAHB study,” Edelstein says.

It seems most of the tightening has come from smaller banks. The bank breakdown shows that 20.5 percent of large banks reported easier lending standards and 10.3 percent reported tighter lending standards, meaning a net increase of 10.2 percent showing easier standards. On the small bank side, 13.9 percent reported tighter lending standards on net because none of these banks eased their lending standards on loans secured by multifamily residential properties over the past three months, according to the NAHB.