NSO Survey Flags Heavy Reliance On Own Income, Informal Borrowing For Home Construction

NSO’s latest construction survey shows most Indian households still build with savings and informal loans, exposing weak formal credit reach in a sector with nearly 1 crore households.

1. What has happened? NSO said 79% of households financed construction through own income and informal loans, while only 21% used institutional funding.
    
2. What was the previous update? MoSPI released the technical findings on April 10, 2026, after fieldwork linked to ASUSE 2025 during July-December 2025.

India’s home construction pipeline is still running largely outside the formal lending network. The NSO-MoSPI technical report, released on April 10, 2026, showed that households leaned far more on personal income and borrowing from relatives and friends than on banks and other institutional lenders.

That leaves many families exposed to delayed construction, uneven borrowing terms and lower financial protection. It also keeps a large slice of housing-linked activity informal, even as household construction continues to generate jobs and spending across local markets.

What The Latest NSO Findings Show?

The same report said about 97% of households used own income as one source of funds, and own income accounted for around 77% of total construction spending.
 

Materials formed nearly 3/4 of total cost, while labour contributed about 22%. Bricks, cement, iron and steel together made up nearly 60% of overall expenditure.

For the wider public, the immediate takeaway is simple: formal construction credit is still not reaching enough families. But there is also a positive signal. Rural households reported 23% institutional funding, higher than 13% in urban areas, showing that targeted credit access can improve uptake.

What Earlier Developments Led To This?

MoSPI has described this as its first comprehensive attempt in decades to estimate economic activity in the unincorporated construction segment and household own-account building. The pilot study was conducted alongside ASUSE 2025, and its findings were used by the National Accounts Division for revised estimation work.
 

Other reported figures also show the size of this ecosystem. India had 10.27 lakh unincorporated construction establishments, with around 77% hiring at least 1 worker regularly. On average, each establishment engaged about 5 workers, while households undertaking construction used about 4 labourers. 

What Officials And Market Watchers Are Saying?

MoSPI’s position is that the survey fills a long-standing data gap in an under-measured sector. Business Standard also noted that the study updates construction activity across unincorporated establishments and households.

Market watchers say the financing gap will not close unless formal loans become simpler and cheaper to access. A LoansJagat report dated March 27, 2026 said borrowers are increasingly comparing the total cost of a loan, not just the EMI, which explains some hesitation around formal borrowing.

Conclusion

The NSO findings show India’s household construction economy still depends heavily on savings and informal credit. The next test will be whether formal lenders can widen access without adding friction.