Total construction spending in New York City is expected to reach a record $18.4 billion in 2005, according to an interim report released yesterday by the New York Building Congress, but the 2.8% increase over last year’s spending would represent a slowdown in growth.

In April, the NYBC predicted that total construction spending this year would reach $19.9 billion. Yesterday’s figures suggest the construction and real estate trade group’s estimate was high by 8%.

Between 2003 and 2004, construction spending in the city grew 18.4%. This year’s projected increase in spending would be one of the smallest increases over the last decade, when the average annual growth rate in spending was about 6.6%.

A real estate appraiser and consultant, Jonathan Miller, said: “Those are still huge numbers. It’s still good. But it’s not growing at the rate it has in prior years.”

Kenneth Simonson, an economist for Associated General Contractors of America, a construction trade association, said the increase in spending could be due to sharp construction cost increases in the last year, not additional construction. He cited diesel fuel, the price of which has increased 59% in the last 12 months, as one of several factors driving up costs.

“I would say 2.8%, that’s weak growth in the face of so many steep cost increases,” Mr. Simonson said. “If you look at square footage, you may actually find that fewer square feet or fewer projects were being done.”

The president of the NYBC, Richard Anderson, called the growth “extraordinary.” He said that the volume of residential units under construction has more than doubled in the last 10 years.

“Some of the increase is inflation, but it ain’t 100%.There is a big increase in volume,” he told The New York Sun.

“Across the board, construction costs are under pressure, but they are not skyrocketing yet,” Mr. Anderson said. “There is strong demand-side pressure, and that will certainly affect the supply side. The question is how much and in what ways.”

The increase in construction spending fell mostly within the residential sector, with 27,500 new units being built this year, up 9% from 2004. Over the last five years, the average annual growth rate in the volume of residential units under construction has been almost 13%. The report projects that 30,000 residential units will be constructed in 2008.

The report showed a downturn in commercial construction, which bolstered Mayor Bloomberg’s recent argument that market conditions call for increased residential construction in Lower Manhattan to replace the commercial space that is planned. The NYBC reported only one major office construction start in 2005, at One Bryant Park, and seven more commercial spaces in development.

Mr. Anderson said: “We are just not building a lot of office buildings. That has always been a cyclical thing. In most of the ’90s, we didn’t build any office buildings.”

The report predicts about a 24% increase in government construction spending in New York in 2006, when spending could reach $12 billion. That figure is based on the most recent capital plans of the city, state, and federal agencies overseeing New York City’s infrastructure. The public sector contribution represents more than half of the city’s total construction spending.

Mr. Anderson said most of the public sector increase stems from record-setting Metropolitan Transit Authority and the Port Authority capital plans. The approval of the transportation bond act in last Tuesday’s election also will initiate further federal spending, he said.

Looking ahead to 2006, the report projects a 16.1% increase in total construction spending, followed by a 5.4% increase in 2007 and a 0.6% increase in 2008.