Overall U.S. construction in 2007 is forecast to slow from previous levels, thanks to a downturn in residential building, according to recent reports. But nonresidential construction should stay relatively strong in the new year, with institutional and commercial building leading the way.

McGraw-Hill Construction reports total construction starts will drop 1 percent in 2007. Housing starts will fall 5 percent, with both single and multifamily housing taking a hit.

A large backlog in unsold homes suggests home construction may be slow to turn around, but most analysts expect declines to moderate in 2007, according to the Fed. Housing demand may also improve in 2007.

McGraw-Hill reports that retail construction will decline as housing starts slow. Retail …