Thanks to the housing bubble, Phoenix garnered a reputation for dusty abandoned homes and half-built tracts of retail sprawl. Arizona’s biggest city suffered a 55% drop in home prices since the 2006 peak and it consistently ranks among the country’s 20 worst cities in terms of foreclosures. Yet a recent rebound in home sales — and more modestly in home prices — has spurred talk of a recovery there.

Turns out that budding rebound extends out into overall construction, too. In 2011, the Phoenix metro area welcomed a 41% increase in new construction, totaling $5.3 billion in new starts for both residential and non-residential building projects. “In the case of markets that were categorized by the housing boom and bust, that (construction) correction has already occurred,” explains Robert Murray, vice president of economic affairs at McGraw-Hill Construction, a New York City-based construction data firm.

“In the case of markets that were categorized by the housing boom and bust, that (construction) correction has already occurred,” explains Robert Murray, vice president of economic affairs at McGraw-Hill Construction, a New York City-based construction data firm. “Now areas like Phoenix are in the process of seeing an upturn in new structures – that aren’t even necessarily housing.”

In Phoenix, that construction spending jump comes in part from a new $5 billion Intel semiconductor manufacturing facility for which $1.5 billion worth of building began last year. The up-and-coming facility, located outside of city limits in nearby Chandler, Ariz., helped thrust the Phoenix Metropolitan Statistical Area into the No. 8 spot on Forbes’ list of the American Cities with the Most New Construction.

To compile our list, the folks at McGraw-Hill Construction sorted through building data for the nation’s Metropolitan Statistical Areas (MSAs) to find the 20 places where the most money was spent on new construction in 2011. MSAs, geographic entities defined by the U.S. Office of Management and Budget, include the cities for which they are named as well as the surrounding suburbs.

We looked at the dollar amount of new construction starts, or projects where ground has been broken and work begun, for structures that fall under the “Total Building” umbrella. Total Building includes single-family home construction, multi-family home construction, office space, retail space, warehouses, healthcare facilities, educational buildings, manufacturing plants and research facilities. We did not include money spent on public works projects such as bridges, streets and parks. Nor did we include electric utility construction.

We homed in on construction starts because they are a leading indicator of economic activity and one that is commonly used by builders, developers and economists. Even so, it’s worth noting that tracking construction by starts is hardly foolproof, as work can begin on a project and still stall–if a developer loses their financing, for instance. “There were a substantial number of projects deferred in 2008 and 2009 but those cases are much less so today, looking at 2010, 2011, and now in 2012,” Murray said.

Coastal cities fare the best in terms of new projects. New York City lands No. 1 on our list, with $17.2 billion worth of new construction in 2011. New York is home to one of the country’s biggest construction projects, the 16-acre, seven tower World Trade Center site that has bolstered Big Apple construction spending for years now. But last year it was joined by another large site, Gotham West, a massive $520 million residential project on Manhattan’s Far West Side slated for completion in 2014. The neighborhood will continue to rack up construction spending into 2012 and beyond too, since Hudson Yards, the $12 billion mega development a few blocks away is slated for the first phase of ground-breaking later this year.

Read on to see the rest of the top five cities with the most construction:

5. Chicago
M.S.A: Chicago-Naperville-Joliet IL-IN-WI
2011 Construction Starts: $6 billion
2010 Construction Starts: $5.9 billion
2009 Construction Starts: $6 billion

No. 5: Chicago Photo: AFP/Getty Images

4. Washington, D.C.
M.S.A: Washington-Arlington-Alexandria, DC-VA-MD-WV
2011 Construction Starts: $8.1 billion
2010 Construction Starts: $7.9 billion
2009 Construction Starts: $8 billion

No. 4: Washington, D.C. Photo: iStockphoto

3. Houston
M.S.A: Houston-Baytown-Sugar Land, TX
2011 Construction Starts: $8.8 billion
2010 Construction Starts: $8.1 billion
2009 Construction Starts: $8.5 billion

No. 3: Houston Photo: Thinkstock

2. Dallas
M.S.A: Dallas-Fort Worth-Arlington, TX
2011 Construction Starts: $9.5 billion
2010 Construction Starts: $9.7 billion
2009 Construction Starts: $9.1 billion

No. 2: Dallas Photo: David Sucsy/iStockphoto

1. New York
M.S.A: New York-Northern New Jersey-Long Island, NY-NJ-PA
2011 Construction Starts: $17.2 billion
2010 Construction Starts: $22 billion
2009 Construction Starts: $17.3 billion

No. 1: New York