U.S. construction spending rose 1% in February, following an upwardly revised 2.5% surge in January, the Commerce Department said in a report today.
The value of all construction put in place during February increased to a seasonally adjusted $1.32 trillion, the highest level since May 2018, the report said. Homebuilding rose 0.7% to $540.9 billion, while government spending jumped 3.8% to $303 billion.
“The numbers are clearly better than expected, and they included fantastic upward revisions to January,” said Christopher Low, chief economist with FTN Financial in New York.
The boost in residential construction spending along with falling mortgage rates signal the next few months may be a strong period for home sales, he said.
“For builders to come back like this, they must be optimistic for a reason,” Low said. “After coming out of a period of weakness at the end of last year, they must sense stronger demand.”
State and local government construction spending rose 3.8% after soaring 5.7% in January. Federal construction projects rose 0.9% to the highest level since October 2017. Spending on private nonresidential buildings, such as power plants, fell 0.5% in February after gaining 1.1% in January.
