Compared to 2007, the nation's construction spending in May stands 6 percent below where it was last year, but today's report from the U.S. Census Bureau contained a few pieces of hope for builders.

While new single-family construction spending declined 3.4 percent between April and May of this year to land at a seasonally adjusted annual level of more than $197 billion, that dip represents one of the smallest such drops in the sector during the last year.

As a result, industry watchers sounded practically bullish today, despite May's 39.2 percent year-over-year reduction in new single-family construction activity.

"Going forward, the drop will continue to get smaller, and housing will progressively become a smaller drag on real [gross domestic product] growth. Indeed, we expect residential investment to add to growth starting in the second quarter of 2009," said Patrick Newport, U.S. economist for Global Insight, a research firm in Lexington, Mass. 

Housing analyst Ivy Zelman of Zelman and Associates also noted that the freefall in housing appears to have slowed significantly. "For residential investment, the market remains severely depressed, dropping at an annualized pace of 19 percent in May," she said. "However, the year-over-year declines have stabilized over the last three months, reaching a near-term trough in March."

Overall, total construction spending, which includes public works as well as private projects, hit a seasonally adjusted level of $1.1 trillion in May, according to the U.S. Census Bureau. 

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Alison Rice is senior editor, online, at BUILDER magazine.