Just be kind and calm in your responses to her. That doesn't mean that you have to be verbally abused by her. If she does that just tell her the conversation is at an end until she can be civil. Maybe you could go out with the dog or call him in if he starts barking at night.
It may be that she is, as your husband says, jealous of your life or unhappy with her own. Just continue to be kind to her and get going on that fence. Good luck.