Construction Contracts to Fall 5% in ‘88, Forecast Says

Construction contracts will decrease 5% this year as the nation’s continuing building slump is worsened by a fall in housing starts, according to a private forecast issued Monday.

Construction contracts in 1988 are expected to total $246 billion, down from $257.62 billion last year, McGraw-Hill Information Services Co. said.

In its latest Dodge-Sweet’s Construction Outlook, McGraw-Hill predicted that housing starts would tumble 9% to 1.45 million units this year, with most of the drop coming from the apartment sector. The contract value of housing construction is expected to fall 3%, McGraw-Hill said.

The housing situation could worsen if credit becomes more expensive in reaction to inflationary pressures, the business information company said in a news release.

Overall construction has slumped this year because of several years of overbuilding in the commercial and office markets, McGraw-Hill said.

The company forecasts that the contract value of office building will plunge 14% this year, while store and other commercial building will drop 12%.

The total value of non-residential construction contracts is expected to fall 8%.

Public works construction contracts are forecast to remain steady, totaling $42.25 billion, compared to $42.44 billion in 1987.