Delinquency rates for all construction and land loans rose to 14.5% during the first quarter, up sharply from 11.4% during the fourth quarter of 2008 and nearly triple the 5% rate in the fourth quarter of 2007, according to the report.

"Starts dropped off during 2008 and so that is now having an impact on the volume of construction loans outstanding," Foresight principal Matt Anderson tells GlobeSt.com. "So in one sense it is not unexpected but on the other hand it does reflect reduced liquidity and reduced volume flowing into market."

In terms of delinquency rates, Anderson expect them to keep rising in 2009 for all major property types. "[The delinquency rate for] for-sale residential is at historic highs but, given current state of market, we don't see any reason to believe that those rates will turn around in the immediate future," he says. "Looking at commercial real estate, the halt in new construction and the deterioration of market fundamentals are probably going to drive those delinquency rates up as well."

Delinquency rates for apartment and non-residential commercial construction have risen to 6.8% and 8.9%, respectively; the rates are three times what they were during the previous peak in the second half of 2001. That said, they are significantly below the delinquency rates in the for-sale housing sector.

The singlefamily and condo construction sectors are the weakest by a wide margin, with delinquency rates rising to 22% and 32.3%, respectively. "Despite some indications that residential prices may be bottoming, the severe cumulative declines in boom-bust markets will cause these rates to rise further during 2009," states the report.

Singlefamily residential construction loans outstanding contracted by 9% during the first quarter. The number of construction loans outstanding during the first three months of 2009 was 5% below the final three months of 2008, which was 4% less than the third quarter of 2008. All major construction categories are now declining, according to Foresight, including commercial real estate construction.

Multifamily construction loans outstanding fell by 11% during the first quarter, the result of further declines in condos and a sharp decline in apartment construction lending. Commercial construction loans have begun to shrink, albeit by a slight 1% in the first quarter.

"We believe this downward trend will accelerate in the coming quarters as a lack of new starts will sap demand for construction financing, and will represent the first major contraction since the previous cyclical low in 2003," states the report.