City living is driving NYC construction into top gear.

New York City's residential construction boom is part of a national revival in central-city construction, according to Economic Notes, a quarterly publication released by New York City Comptroller William C. Thompson, Jr.

According to the Comptroller's Office analysis, New York City is experiencing its biggest residential construction boom in three decades.

The City issued building permits for a total of 62,526 new housing units in 2005 and 2006. The two-year total is the most since 1971 to 1972. Although the number of new housing permits dropped 14% in the 4Q06 from 4Q05, they remained at a high level into 2007.

The analysis suggests that housing development in the nation's largest central cities has exhibited a resurgence during this decade and that New York has had one of the strongest revivals. The 25 largest American cities have increased their share of national housing permits from 6.5% in 1997 to 9.8% in 2006.

The housing construction boom has been most pronounced in the oldest and densest of these cities. Older cities, which were already among the 25 largest in 1940, increased their share of large-city housing permits from 41% in 1997 to 56% in 2006.

New York City has not only outperformed the national trend, but that of the large-city group as well. In 1997, the City accounted for 9.6% of the new residential units authorized in the 25 largest cities. By 2006, its share had grown to 17.2%.

Two cities closest to New York City in size, Los Angeles and Chicago, have had construction revivals that closely resembled New York's pattern. Between 1997 and 1999, Chicago issued about 4,000 residential permits per year; that number rose to 10,350 per year between 2004 and 2006. Residential growth in Los Angeles was even greater, with 3,200 permits issued between 1997 and 1999, and 12,500 between 2004 and 2006.

The Comptroller's report also shows that Real Gross City Product (GCP), a measure of the overall City economy, grew 3.6% for the full year of 2006, the third consecutive year of solid growth for the City's economy. Economic growth, however, decelerated during the course of the year. The City's GCP estimated growth was 1.9% for 4Q06, the weakest quarter of 2006.

"The national economy, which grew slowly during the last nine months of 2006, has begun to act as a drag on the local economy," Thompson said. "Nationally, growth has been weak due to a declining housing market and record trade deficits."

Despite the unsettled housing and mortgage markets, Thomspons said a receission is unlikley during 2007, however, he warned, "The economy has entered a period of heightened uncertainty, and fiscal planners will need to monitor future economic data carefully."

Economic Notes also noted that the city added 62,200 jobs during 2006, the most in six years. Personal income taxes withheld from paychecks rose 14.6% in 4Q06, compared to the three previous months and the unemployment rate fell to 4.4%.