NEW YORK -- Contracts for new construction declined 6 percent in April, reaching a four-year low and resuming a slide that began late last year, the F.W. Dodge division of McGraw-Hill Inc. reported this week.
The decline was blamed on a credit crunch affecting commercial and residential builders.
"Events of the past six months have changed the character of the construction sector from stable to vulnerable," said George A. Christie, chief economist at F.W. Dodge.
He said tight credit for builders had become a bigger problem than mortgage rates, which he described as "workable."
"The current rate of contracting, which is only about 85 percent of what it was last fall, seems to bear out the concern that we've been getting an overreaction by bankers to the regulatory clampdown on high-risk real estate lending practices," Christie said.
That clampdown was precipitated by the crisis in the savings and loan industry.
The Dodge index, which uses 1982 as its base of 100, dropped to 146 in April from 156 in March. The last time the index was lower than 146 was in January 1986 when it reached 145. With the exception of a 3 percent increase in March, the index has been declining since it peaked at 181 in September.
The yearly pace of total contracting was $230.2 million last month, down from March's $245.5 million.
Non-residential building set the pace with a 12 percent drop in April. Home building construction dropped 4 percent in April, while public works and utilities projects increased 1 percent.
For the first four months of 1990, construction contracting trailed the first four months of 1989 by 9 percent.
The Northeast continued its decline of recent months by dropping 27 percent compared with the first four months of last year. The South trailed the pace set in 1989 by 11 percent. The West held even with last year's contracting through April and the North Central, leading last year by 5 percent, was the only region to show improvement in the first four months of 1990.