NEW YORK CITY-The New York Building Congress reported Wednesday that construction spending in the city for 2010 was down 12% compared to 2009. Last year saw spending at $23.7 billion.

While construction spending looks bleak, signs point to an increase in development. Massey Knakal, for instance, reported that sales of development sites for Q1 2011 hit $29.8 million in Brooklyn, a 157% increase over the same quarter last year.

Despite this bright spot, Richard T. Anderson, president of the New York Building Congress, doesn’t think the increase in development--particularly at previously stalled sites--means much. “People are hopeful and optimistic, but it really doesn’t add up to anything,” Anderson tells GlobeSt.com. “The last numbers that we looked at showed the stalled sites were growing.”

Anderson thinks that the city’s best bet for improving construction spending is overall employment numbers rising. New York City’s unemployment rate came in at 8.7% for March, a modest improvement over the previous month.

“The overall picture is still one of severe downturn in the residential sector,” Anderson says. NYBC data, in fact, shows that construction spending in this area was down 14%, to $2.2 billion in 2010. While waiting for employment to pick up, Anderson sees public sector spending on construction projects as being key. “The best thing for this market is for governmental and institutional spending to hold up,” he says.

Public sector spending accounted for 57% of New York City’s construction spending, the NYBC found. This, despite the fact that government spending decreased from $15.7 billion in 2009 to $13.5 billion last year.

Nationally, construction spending is down as well. The US Census reported earlier this month that construction spending for the first two months of the year was down 8.2% compared to the same period a year ago, coming in at $103.7 billion.