Spending for residential construction in the city is falling, a new report says, as the total spending for the industry is surging to record highs, even amid ballooning costs.

Total spending for construction is estimated to hit $25.6 billion in 2007, according to a report from the New York Building Congress, an increase from 2006 that would represent a slowdown in growth compared with previous years. The report, which its authors say is based on conservative estimates, said a record high $24.6 billion was spent on construction in the city in 2006, an 18% jump from 2005.

Commercial and governmental construction spending grew in the same period with spending on residential construction dropping to $4.8 billion from $5.2 billion. A decline is predicted for the residential sector in 2007.

The president of the Building Congress, Richard Anderson, said the decline in apartment construction is insignificant, and the outlook for the all sectors of the industry is positive.

“We thought last year would be the peak, we thought 2005 would be the peak — there’s just no end in sight,” Mr. Anderson said.

The record-high number projected for 2007 is impressive, real estate experts say, given that construction costs continue to rise at rates well beyond inflation, as do land prices.

A partner with the appraisal firm Miller Samuel, Jonathan Miller, said the drop in residential spending is a reflection of the booming market for office space, which has, for the first time in years, made commercial developments often more appealing than residential.

“Two years ago, any acquisition for a development site was always going to be a residential condo — now it’s not so clear,” Mr. Miller said.

Real estate experts and builders were quick to caution that eventually higher construction costs would push project budgets so high as to noticeably curtail growth, though for now the strong citywide demand for housing and office space is pushing new projects forward.