Construction spending stumbled in May, falling 0.9% compared to the previous month to a seasonally adjusted level of $964 billion, according to data released Wednesday by the U.S. Census Bureau. On an annual basis, that qualifies as an 11.6% drop in such economic activity.

Private residential construction also slowed, dipping 3.4% to a seasonally adjusted level of $240 billion. That’s 33.9% below the same month one year ago.

New single-family construction showed some softness in May, falling 4.5% to a seasonally adjusted pace of $91 billion compared to April. On an annual basis, that represents a 54.1% decline.

But Patrick Newport, U.S. economist for IHS Global Insight, saw glimmers of hope in the single-family numbers. “The monthly percentage declines in single-family residential construction are getting smaller. Single-family home construction dropped 4.5% (the 39th-straight monthly drop). In February, the drop was 11.1%,” he noted. “Going forward, the drops will continue to shrink, and before the end of this year, this category will be growing for the first time in nearly four years.”

He sounded less sanguine about multifamily construction, which contracted 9.6% on a monthly basis and 29% on an annual basis to a $33 billion level in May.

“The monthly percentage declines in multi-family residential construction are getting larger,” Newport said. “May's 9.6% drop was the second largest ever [in the data series, which begins in 1993]. Unfortunately, more bad numbers have entered the pipeline. In May, multifamily permits—a leading indicator for multifamily construction--fell 8.3%, the eleventh consecutive monthly decline, to a record low [annual rate] of 110,000 units. Over the past 12 months, this market has collapsed; permits in May were down 68% year-over-year.”

Why? Capital—or lack thereof. “The collapse [in multifamily construction] is likely related to financing. Some builders are overwhelmed with debt. Others cannot find funding to finance projects with positive net present values,” Newport suggested.

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